Question #1 Download monthly adjusted close price data for Apple (AAPL, Stock A) and Walt Disney Company (DIS, Stock B) for the period of Sep. 2005 through Sep. 2022 (use Finance.Yahoo.com). Use the SP500 index (SPY) as a proxy for the market portfolio. Use Excel for this question. Stock returns are computed as rt+1 = Pt+1 Pt Pt 1. Compute the mean and the standard deviation of these three assets: mean returns {A, B, m} standard deviations of returns {A, B, m} (Hint: use stdev.p function in Excel) 2. Compute m,A the correlation coefficients between asset m and asset A, and m,B the correlation coefficients between asset m and asset B. (Hint: use CORREL function in Excel) 3. Estimate A and B using the following formula, A = m,A A m B = m,B B m (Hint: alternatively you can use the SLOPE function in Excel) 4. Consider a portfolio-p with W1 = 0.6 in stock A, W2 = 1 0.4 = 0.4 in stock B. This portfolio would have generated an additional time series of historical returns rp,t = W1 rA,t + W2 rB,t. (a) Using data series {rp,t}, compute the mean and standard deviation of portfolio returns, denoting them as p and p, respectively. Compute m,p the correlation coefficients between market return rm,t and portfolio return rp,t. (b) Compute the beta of this portfolio, p by calculating p = m,p p m using data on rp and rm. (Hint: alternatively you can use the SLOPE function in Excel) 5. Using estimates of A and B from part 3 of this question, compute alternatively p = W1 A + W2 B Compare p and p , comment briefly! 6. Compute A,B the correlation coefficients between asset A and asset B, . Use the following formula for portfolio standard deviation, compute p = (WAA)2 + (WBB)2 + 2 A,B WA A WB B with WA + WB = 1 Compare p from part 4(a) and p, comment briefly!