The monthly excess return of 6 stocks are given in the excel file (See the attached excel file). Using the information given to you in the excel, create an optimal portfolio that comprised of a passive portfolio of a market index and an active portfolio that is made up of these 6 stocks. If you make any assumption, please clearly state your assumption and why you made such assumption and its justification. Verify whether or not the assumptions underlying Index Models are met. Also, calculate the beta and the Sharpe ratio of the portfolio. In all of your calculation, please make sure to use the formulas (not just numbers) in your excel file, so that can evaluate your work. Cells with just number without any formulas won't receive any credit. Please use excel and upload the file to Blackboard. In the excel file, I have provided the information on the historical excess return on the market index and risk-free rate. I've also provided the historical excess return data for three securities. Given these information, you have to answer the questions in each worksheet. Questions 1, 2 and 3 are about CAPM and you have to complete the table. Worksheets Q1, Q2, and Q3 correspond to security 1, 2, and 3. Please copy and show your regression output in the corresponding worksheet. For question 4 (in worksheet Q4), you have to justify the level of idiosyncratic risk associated with each of these three securities (a lot, a little, or some). Please use excel to answer the questions and upload the excel file. Answer each question in its corresponding worksheet. The monthly excess return of 6 stocks are given in the excel file (See the attached excel file). Using the information given to you in the excel, create an optimal portfolio that comprised of a passive portfolio of a market index and an active portfolio that is made up of these 6 stocks. If you make any assumption, please clearly state your assumption and why you made such assumption and its justification. Verify whether or not the assumptions underlying Index Models are met. Also, calculate the beta and the Sharpe ratio of the portfolio. In all of your calculation, please make sure to use the formulas (not just numbers) in your excel file, so that can evaluate your work. Cells with just number without any formulas won't receive any credit. Please use excel and upload the file to Blackboard. In the excel file, I have provided the information on the historical excess return on the market index and risk-free rate. I've also provided the historical excess return data for three securities. Given these information, you have to answer the questions in each worksheet. Questions 1, 2 and 3 are about CAPM and you have to complete the table. Worksheets Q1, Q2, and Q3 correspond to security 1, 2, and 3. Please copy and show your regression output in the corresponding worksheet. For question 4 (in worksheet Q4), you have to justify the level of idiosyncratic risk associated with each of these three securities (a lot, a little, or some). Please use excel to answer the questions and upload the excel file. Answer each question in its corresponding worksheet
