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P5.12 Use the table of annual returns in Problem 5.9 for Home Depot (HD) and Lowe's (LOW) to create an Excel spreadsheet that calculates
P5.12 Use the table of annual returns in Problem 5.9 for Home Depot (HD) and Lowe's (LOW) to create an Excel spreadsheet that calculates returns for portfolios that comprise HD and LOW using the following, respective, weightings: (1.0, 0.0), (0.9, 0.1), (0.8, 0.2), (0.7, 0.3), (0.6, 0.4), (0.5, 0.5), (0.4, 0.6), (0.3, 0.7), (0.2, 0.8), (0.1, 0.9), and (0.0, 1.0). Also, calculate the portfolio standard deviation associated with each portfolio composition. You will need to use the standard deviations found previously for HD and LOW and their correlation coefficient. P5.13 Create an Excel spreadsheet that graphs the portfolio return and standard deviation com- binations found in Problem 5.12 for Home Depot and Lowe's. CHAPTER 5 MODERN PORTFOLIO CONCEPTS Year HD Returns LOW Returns 2005 -4.3% 16.1% 2006 1.0% -6.1% 2007 -31.1% -26.8% 2008 -11.4% -3.3% 2009 30.5% 10.6% 2010 25.0% 9.2% 2011 23.5% 3.4% 2012 50.3% 42.9% 2013 35.9% 41.8% 2014 30.2% 41.2% 233
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