Find the monthly returns for the two stocks

Assignment Help Financial Management

Reference no: EM131984078

Below are a set of prices for Facebook (FB) and Southwest Airlines (LUV) over the last 3 months. Keep in mind that we normally would not calculate the below statistics for such a short time span, as your answers will be heavily skewed by recent market activity.

	FB	LUV
12/1/16	115.05	49.84
1/1/17	130.32	52.31
2/1/17	135.54	57.80
3/1/17	137.42	58.88

a) Find the monthly returns for the two stocks.

b) Find the annualized expected return for each stock.

c) Find the annualized volatility for each stock.

d) Find the correlation between the two stocks (note that you want to use monthly, not annualized, standard deviation here).

e) Assume you invest 60% of your portfolio in FB and 40% in LUV. What is your annualized portfolio expected return?

f) Following from part (e), what is your annualized portfolio standard deviation?

g) In words, describe what would have happened to your response to part (f) if the correlation between FB and LUV the assets had been closer to 1.

h) Given the market performance and the performance of these two stocks over the last months, what type of risk would have been most responsible for generating the returns in your portfolio?

Reference no: EM131984078

Questions Cloud

What is target debt-equity ratio : What is the target debt-equity ratio if the targeted cost of equity (Rs) is 23.64%? Assume no taxes.

What is value based management : What is Value Based Management (VBM)? What should the role of the CFO be in an organization that practices VBM fully?

Find the accumulated value of this annuity at the end : Find the accumulated value of this annuity at the end of fifty years if the annual effective rate of interest remains 4.7% throughout the time of the annuity.

Organise your spreadsheet with a title page and menu : Assignment - Instruction document for Excel Spreadsheet. You should organise your spreadsheet with a title page and menu

Find the monthly returns for the two stocks : Find the correlation between the two stocks (note that you want to use monthly, not annualized, standard deviation here).

Here are book and market-value balance sheets : Here are book- and market-value balance sheets of the United Frypan Company. How much of the firm's market value is accounted for by debt-generated tax shield.

Best way to describe the postwar japanese labor market : To aid in its economic recovery after the Asian Financial Crisis, what main areas of its economy did South Korea have to restructure/reform?

Identify new product or service-either recently rolled out : Identify a new product or service—either recently rolled out or about to be rolled out—in the company you chose in Module 1.

Calculate the present value of those deposits : A series of annual deposits begin one year from now with a deposit of $400 and then each new deposit (starting at year 2) in increased by $65 for 13 years.

User Account

All Pages