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Problem 3 Please go to Yahoo! Finance (http://finance.yahoo.com) and download any two sto stock prices in 2019. Please complete this question in Excel and upload
Problem 3 Please go to Yahoo! Finance (http://finance.yahoo.com) and download any two sto stock prices in 2019. Please complete this question in Excel and upload the Excel fi formulas. a. Calculate their daily returns in 2019; b. Estimate the average return, return variance and return volatility for both sto c. Estimate the correlation between these two stocks; d. Construct a portfolio consisting of 50% of each stock. What's the portfolio' 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 fi sources, as an approximation of the risk-free rate.) Answer: Expected return of a portfolio E(IP) = WA*E(rA)+WB*E(IB)+...+W Where, E(Ip) is the expected return of the portfolio. I E(rA), E(rB), etc., are the expected returns of assets of A, B, etc. I WA, WB, etc., are the weights of assets of A, B, etc. Variance of a stock = (Standard Deviation of the stock) Variance of a portfolio = Op?=(WA2*642)+(WB?*OB?)+2*QA,B*WA*WB*GA*OB Where, I OA, OB are the standard deviation of Stocks A and B
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