Please note that for graphs, you can use Excel or any other software to do the job. Alternatively, you can also use a graph paper and draw by hand. Data: This project makes use of annual data for two risky securities: the S&P 500 Index and Gold. Annual values for each of these securities during the period from 1975-2015 are

DATE	S&P 500 Index	Gold Prices
1975	90.19	139.30
1976	107.46	133.80
1977	95.10	160.45
1978	96.11	207.83
1979	107.94	455.08
1980	135.76	594.92
1981	122.55	410.09
1982	140.64	444.30
1983	164.93	389.36
1984	167.24	320.14
1985	211.28	320.81
1986	242.17	391.23
1987	247.08	486.31
1988	277.72	418.49
1989	353.40	409.39
1990	330.22	378.16
1991	417.09	361.06
1992	435.71	334.80
1993	466.45	383.35
1994	459.27	379.29
1995	615.93	387.44
1996	740.74	369.00
1997	970.43	288.74
1998	1229.23	291.62
1999	1469.25	282.37
2000	1320.28	271.45
2001	1148.08	275.45
2002	798.55	321.18
2003	1111.92	417.25
2004	1211.92	435.60
2005	1248.29	513.00
2006	1418.30	635.70
2007	1468.36	836.50
2008	903.25	869.75
2009	1115.10	1087.50
2010	1257.64	1420.25
2011	1257.60	1531.00
2012	1426.19	1664.00
2013	1848.36	1204.50
2014	2058.90	1135.80
2015	2043.94	1060.30

Capital Allocation Lines: Assume that the mean return, standard deviation, and correlation estimates you calculated above provide a reasonable forecast of the expected returns and risks of these securities for the coming year. Based on these forecasts, plot the two risky securities on an expected return standard deviation graph. Also, plot the risk-free security. Be sure to label all three securities on the graph. Draw the Capital Allocation Line for each of the risky securities (S&P and Gold). Attach the graph as Exhibit 2.

Risky Portfolios: Calculate the expected returns and standard deviations of portfolios that combine the two risky securities (S&P and Gold), varying weights from 0% to 100% in increments of 5% (note: this should result in 21 portfolios). Attach the spreadsheet showing all relevant calculations as Exhibit 3.

The Opportunity Set and the Tangency Portfolio: Plot the risk-free security and the 21 portfolios described in question 4 on an expected return standard deviation graph. Be sure to clearly label the S&P 500, Gold, and the risk-free security on the graph. Identify and label the minimum variance portfolio on the graph. Identify and label the optimal risky (a.k.a. tangency) portfolio on the graph and draw the Capital Allocation Line (CAL) for this portfolio. Attach the graph as Exhibit 4.

(a) What are the portfolio weights in the Tangency Portfolio? What are the mean and standard deviation of the Tangency Portfolio?

(b) What are the portfolio weights in the Minimum Variance Portfolio? What are the mean and standard deviation of the Minimum Variance Portfolio?

(c) What are the portfolio weights in the Equal-Weighted Portfolio? What are the mean and standard deviation of the Equal-Weighted Portfolio?