Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please go to Yahoo! Finance (http://finance.yahoo.com) and download any two stocks monthly stock prices over the past five years. Please complete this question in Excel
Please go to Yahoo! Finance (http://finance.yahoo.com) and download any two stocks’ monthly stock prices over the past five years. Please complete this question in Excel and upload the Excel file with all formulas. a. Calculate their monthly returns over the past five years; b. Estimate the average return, return variance and return volatility for both stocks; c. Estimate the return correlation between these two stocks; d. Construct a portfolio consisting of 50% of each stock. What’s the portfolio’s Sharpe ratio? Compare it to the Sharpe ratio of each stock. (Hint: you can use the 1-year T-bill rate, or any other similar treasury rate from various sources, as an approximation of the risk-free rate.) e. Finally, find the betas of the two stocks from Yahoo! Finance. What are the expected returns of the two stocks and the portfolio, assuming a risk-free rate of 1% and an expected market return of 8%?
Step by Step Solution
★★★★★
3.41 Rating (151 Votes )
There are 3 Steps involved in it
Step: 1
To begin you will need to have a dataset containing the monthly stock prices for the two stocks you ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started