Prepare a short (maximum 2 pages single-sided) executive summary that summarizes your analysis and addresses the questions that are given. also prepare an Excel file with the solution.

ExxonMobil and Walmart

Go to finance.yahoo.com and download the ending monthly stock prices for ExxonMobil (XOM), and Walmart (WMT) for the specified time period (TIME PERIOD: September 30, 2016 September 30, 2021). Use the adjusted closing price, which adjust for dividend payments and stock splits.

Data: Go to finance.yahoo.com and search for the companies using their ticker symbols (XOM and WMT) and then click on the Historical Data on the menu. Set Time Period as September 30, 2016 September 30, 2021, choose Monthly for frequency and use Adj Close prices.

Questions

1. Calculate monthly returns for ExxonMobil and Walmart for this period.

2. Calculate the average return, variance, and standard deviation of returns for each firm. (Use

Excels AVERAGE, VAR and STDEV functions.)

3. Which stock is riskier if held on its own? Why?

4. Assume that you held an equally weighted portfolio of ExxonMobil and Walmart (i.e., a portfolio

with equal dollar investments in each stock). Compute the portfolios rate of return for each

month, and calculate the variance and standard deviation of the portfolios monthly rate of return.

5. Is the portfolio standard deviation more or less than the average of the standard deviations of the

two component stock?

6. What are the betas provided by finance.yahoo.com for each firm? Which stock has more

systematic risk?