Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Obtain monthly adjusted close prices of Microsoft (symbol: MSFT) and Dow Chemical (symbol: DOW) during December 1989 December 2019 from Yahoo Finance. Using Excel, compute

Obtain monthly adjusted close prices of Microsoft (symbol: MSFT) and Dow Chemical (symbol: DOW) during December 1989 December 2019 from Yahoo Finance. Using Excel, compute monthly returns of each company during January 1990 December 2019. Also, compute and report the arithmetic average and the standard deviation of each companys returns. Compute and report the correlation coefficient between these two stock returns. Next, form a portfolio that combines Microsoft and Dow Chemical with equal weight. Compute monthly returns on this newly formed portfolio. Also, compute and report the arithmetic average and the standard deviation of this portfolios returns. Is the portfolio standard deviation smaller than the weighted average of individual standard deviations? Also, compute and report the standard deviation of this portfolios returns using the equation that we learned in class. Were you able to obtain the same answer?

Guidelines:

1. Use the STDEV.P( : ) command to compute standard deviation.

2. Use the CORREL( : , : ) command to compute correlation coefficient.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Principles And Practice

Authors: Timothy Gallagher

7th Edition

0996095462, 978-0996095464

More Books

Students also viewed these Finance questions