The Excel file contains three years of daily price data on two stocks, one in the Euro area and one in the UK and a broad market risk factor for each stock and the two forex risk factors appropriate to a US investor. Use these data to write an essay covering the following topics: (1) Use (a) an equally weighted average of 50 returns and (b) and exponentially weighted average with A = 0.95 to calculate time series of equity betas for the two stocks; (2) Use the current values for the equity betas to calculate four outputs, i.e. the overall Value-at- Risk (VaR) and Expected Shortfall for a portfolio that currently has equal US dollar amounts invested in each stock, using (a) historical simulation and (b) the normal linear VaR model, with inputs derived from the entire three year sample; (3) Decompose the overall VaR into equity VaR and forex VaR, and then disaggregate the total equity VaR into systematic and specific components. INSTRUCTIONS: You can set the Value-at-Risk model parameter values to any (appropriate) level you wish. It is, however, important to state the all the models used in each part clearly, using properly defined mathematical notation. The essay should start with a title page with a title and an abstract (100 words) and candidate number. After that the essay should contain seven numbered sections, with suitable titles of your choice. In the following, the word counts in brackets are guidelines only, there is no strict limit per section, only for the overall word count.The essay should start with a title page with a title and an abstract (100 words) and candidate number. After that the essay should contain seven numbered sections, with suitable titles of your choice. In the following, the word counts in brackets are guidelines only, there is no strict limit per section, only for the overall word count. Here is a guide to what each section should contain: 1. An introduction which demonstrates an understanding of the questions asked and a description of the portfolio (300 words) 2. A description of the data, including suitable figures and tables (500 words) 3. An answer to (1) including a technical description of the models used, a presentation of the results obtained using suitable figures, and a discussion of these results (700 words) 4. An answer to (2) including a technical description of the models used, a presentation of the results obtained using suitable tables, and a discussion of these results (700 words) 5. An answer to (3) including a technical description of the models used, a presentation of the results obtained using suitable tables, and a discussion of these results (700 words) 6. Conclude with a short summary of the empirical results (100 words)