Using the TSX listed stocks below, Find monthly closing prices for each stock for 8 years from Yahoo Finance. Find closing price data for the S&P TSX Composite stock index (your market proxy) for the same period.

a) Calculate the monthly rate of return and variance for each stock and the index.

b) Calculate the beta between each of your 8 stocks and the market index.

c) Calculate and draw the SML, using the most suitable risk-free rate. Plot each

of the 8 securities. Are any over/under priced? As a rational investor, what

should you do?

d) The following question should be answered for the general case rather than

refer to your data (i.e., do not answer by changing variables in your data). Assume that each of following parameters increases (one at a time), and everything else remains the same. What will this change mean for the over/under pricing of stocks with respect to the SML? Your answer should be based on the SML equation. You can answer by drawing a graph or by examining the impact of the parameter change on the SML equation).

(i) The risk-free rate (ii) The return on the market index. (iii) The return on each of the securities. (iv) The correlation of each of the securities return with the return on

the market index.

e) Pick the S&P 500 index and find closing price data for the same period.

Calculate the betas between your 8 stocks and the S&P 500 index. Are betas

the same relative to each index?

f) Using the same risk-free rate, Calculate and draw the second SML. You can

choose to plot the SML on a separate graph or plot the two SMLs on the same graph. Are any of your stocks over/under priced? Are any over (under) priced relative to one index but under (over) relative to the other?

g) The SML can serves as a benchmark for selecting stocks. Discuss your results in terms of a benchmark error.

The companies needed are listed below

CJT.TO Cargojet Inc

CJ.TO. Cardinal Energy Ltd

CJR-B.TO. Corus Entertainment Inc

CWEB.TO Charlotte's Web Holdings Inc

NTR.TO Nutrien Ltd

NFI.TO. NFI Group Inc

NWH-UN.TO Northwest Healthcare Properties Real estate investment Trust

NCU.TO Nevada Copper Corp