Question
Please, help me out with the following problem in details (step by step). I will be solving the problem with Microsoft Excell. Thanks in advance!
Please, help me out with the following problem in details (step by step). I will be solving the problem with Microsoft Excell. Thanks in advance!
Year | XYZ Returns | ABC Returns |
---|---|---|
2011 | 12.35% | 22.28% |
2012 | 12.01% | 8.75% |
2013 | 13.18% | 17.78% |
2014 | 8.51% | 19.66% |
2015 | 16.85% | 4.03% |
A) Calculate the average return and standard deviation of return fo each stock over the past 5 years. Which stock would you prefer to own?Would everyone make the same choice?
B)Calculate the correltaion coefficient between the 2 stocks. Does it appear that a portfolio consisting of XYZ and ABC would provide good diversification?
C) Calculate the annual returns that would have been achieved had you owned the portfolio consisting of 50 % in XYZ and 50% of ABC over the past 5 years
D) Calculate the average return and standard deviation of returns for the portfolio. How does the portfolio compare with the individuals stocks? Would you prefer the portfolio to owning either of the stocks alone?
E) Create a chart that shows how the standard deviation of the portfolio's return changes as the weight of XYZ changes
F) Usin Solver, what is the minimum standard deviation that could be achieved by combining these stocks into a portfolio? What are the exact weights of the stocks that result in this minimum standard deviation?
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