Problem A1. Pick any two stocks, corresponding market index, and download their respective daily prices (Online Data Library), and calculate the simple returns for the three assets. Data set has to include at least 252 observation, but there is no upper limit for the observation period. Provide the descriptive statistics, including the mean, variance, standard deviation, skewness, and kurtosis, and comment on the differences between these three assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Problem A2. Plot the original returns and their respective moving averages (30-day window) for each asset. Comment on the difference between these two time series for each assets, and between the assets. Also, propose an optimal trading strategy having in mind moving-average dynamics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Problem A3. Plot the distribution of the returns using histogram and kernel density plot. Comment on the shape of the distri- bution, and make a comparison between the distribution of returns for the three assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Problem A4. Download some risk-free rate and add it to the data set. Estimate the CAPM for each stock, and provide your interpretation of the results, by emphasizing the difference in the estimated results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Problem A5. Plot the Security Market Line (SML) for each stock, and interpret the results (intuition, comparison, etc.).