Synopsis: Alex Sharpe is pondering her investment strategy for her childrens educational saving. Currently, this money was invested in the Vanguard 500 Index Fund, a no-load mutual fund constructed to track the performance of the S&P 500. In order to achieve higher returns, Sharpe had been considering changing her passive investment strategy to one that was more active.

Assignment: Provide a quick rundown of Alex Sharpes situation. Discuss Ms. Sharpes strategies and goals, how can she add value. Think about issues such as efficiency, risk-return, and how to add value. Include a recommendation of a portfolio make-up (weights, or even suggestions of other stocks).

2) Suppose Sharpes position has been 99% of equity funds invested in the S&P 500 and either 1% in Reynolds or 1% in Hasbro. Estimate the resulting portfolio position. How does each stock affect the variability of the equity investment? How does this relate to your answer in question 1 above?

**** PLEASE POST EXCEL SOLUTION, NOT JUST THE ANSWERS ****

Date	RF (in%)	S&P 500	REYNOLDS	HASBRO
01-02	1.65%	-1.70%	6.13%	1.66%
02-02	1.73%	-2.31%	9.87%	-13.27%
03-02	1.79%	4.37%	-1.37%	10.55%
04-02	1.72%	-5.06%	6.87%	1.01%
05-02	1.73%	-1.19%	2.17%	-4.26%
06-02	1.70%	-7.15%	-23.97%	-11.37%
07-02	1.68%	-8.23%	1.64%	-9.66%
08-02	1.62%	0.64%	7.71%	7.35%
09-02	1.63%	-10.14%	-31.48%	-15.36%
10-02	1.58%	7.35%	0.57%	-8.18%
11-02	1.23%	5.96%	-4.81%	25.44%
12-02	1.19%	-5.50%	9.09%	-9.91%
01-03	1.17%	-2.46%	0.59%	3.90%
02-03	1.17%	-1.72%	-5.78%	0.92%
03-03	1.13%	0.89%	-19.17%	14.70%
04-03	1.13%	8.12%	-12.68%	15.19%
05-03	1.07%	6.18%	21.02%	0.06%
06-03	0.92%	1.48%	9.15%	9.24%
07-03	0.90%	2.18%	-4.54%	7.78%
08-03	0.95%	2.34%	-3.86%	-1.86%
09-03	0.94%	-1.06%	15.78%	0.97%
10-03	0.92%	5.89%	21.47%	16.70%
11-03	0.93%	1.51%	14.93%	1.42%
12-03	0.90%	4.39%	5.34%	-3.75%
01-04	0.88%	2.20%	1.56%	-7.19%
02-04	0.93%	1.40%	4.52%	10.73%
03-04	0.94%	-1.20%	-1.99%	-0.55%
04-04	0.94%	-2.56%	7.06%	-13.15%
05-04	1.02%	1.24%	-13.23%	4.08%
06-04	1.27%	2.00%	20.27%	-3.36%
07-04	1.33%	-3.88%	6.45%	-4.37%
08-04	1.48%	0.11%	4.93%	1.98%
09-04	1.65%	1.91%	-9.88%	1.46%
10-04	1.76%	1.66%	1.21%	-5.90%
11-04	2.07%	4.43%	9.83%	7.57%
12-04	2.19%	3.34%	3.93%	1.84%
01-05	2.33%	-2.74%	2.32%	1.14%
02-05	2.54%	2.09%	1.90%	7.76%
03-05	2.74%	-1.86%	-1.66%	-3.17%
04-05	2.78%	-2.66%	-3.25%	-7.48%
05-05	2.84%	3.59%	6.34%	6.66%
06-05	2.97%	0.99%	-4.96%	3.02%
07-05	3.22%	4.22%	5.72%	5.53%
08-05	3.44%	-0.78%	0.76%	-5.65%
09-05	3.42%	0.93%	-1.10%	-5.07%
10-05	3.71%	-2.19%	2.38%	-4.12%
11-05	3.88%	3.82%	4.73%	8.39%
12-05	3.89%	0.19%	7.09%	-1.18%
01-06	4.24%	3.90%	6.08%	5.05%
02-06	4.43%	-0.36%	4.96%	-4.29%
03-06	4.51%	1.76%	-0.61%	3.99%
04-06	4.60%	1.15%	3.93%	-6.59%
05-06	4.72%	-3.30%	0.26%	-5.94%
06-06	4.79%	-0.19%	4.88%	-2.32%
07-06	4.95%	-0.28%	9.96%	3.26%
08-06	4.96%	2.30%	2.65%	8.56%
09-06	4.81%	1.81%	-4.76%	12.07%
10-06	4.92%	3.60%	1.92%	13.93%
11-06	4.94%	2.13%	1.71%	3.20%
12-06	4.85%	0.91%	1.91%	1.87%