Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Mathematics For Business Economics, Life Sciences, And Social Sciences

Authors: Raymond Barnett, Michael Ziegler, Karl Byleen, Christopher Stocker

14th Edition

0134674146, 978-0134674148

More Books

Students also viewed these Finance questions

Question

What are the pros and cons of credit? Critical T hinking

Answered: 1 week ago