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Using weekly price data of the 30 Dow Jones Industrial Average (DJIA) stocks for the past three years, construct the portfolios listed below. Portfolios Structure:6
Using weekly price data of the 30 Dow Jones Industrial Average (DJIA) stocks for the past three years, construct the portfolios listed below.
Portfolios Structure:6 portfolios of 5 stocks, 3 portfolios of 10 stocks, 2 portfolios of 15 stocks, and 1 portfolio of 30 stocks
- For the portfolios, compute the returns, standard deviations and coefficient of risk variation.
- Analyze the risk and return patterns and diversification benefits.
- Based on the risk/return analysis, which portfolio selections are the most profitable?
- How do the portfolios' performances compare to the S&P 500's?
- What are the advantages and disadvantages of including international stocks in the portfolio?
- If Mr. Smith chooses to include foreign stocks in the portfolio, how can he use derivatives to hedge against currency risk which can be present from international investing? Your well-written draft should meet the following requirements:
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