Expected monthly return, Financial Management

Assignment Help:

In this exercise you will construct efficient portfolios with 5 risky assets using Excel's non-linear optimization routing "Solver". The questions are designed to be sequential and to lead up to the desired result. It is crucial to notice that you will be using past returns to estimate expected returns and risk. From Sakai download the file  data_question1.xlsx which contains monthly returns for AT&T, Ford, Google, Exxon Mobile, and Gold from 2005-2012. The monthly returns have been adjusted to reflect dividend payments and are provided in decimal form to make the necessary calculations easier.

a)  Using the monthly returns provided what is the expected monthly return for each asset and what is the corresponding standard deviation? In order to calculate the mean use the Excel function "AVERAGE"; in order to calculate the standard deviation use the Excel function "STDEV.S".

b)  We discussed in class that when we are analyzing the returns on a portfolio of assets, the covariance or correlations of each asset with the other ones will be crucial in determining the portfolio risk. Using the given monthly returns tabulate the pairwise covariances for each asset pair and tabulate the correlations for each asset pair. Use the Excel functions "COVARIANCE.S" and "CORREL".


Related Discussions:- Expected monthly return

Advantages and the disadvantages of a new stock issue, What are the advanta...

What are the advantages and the disadvantages of a new stock issue? A new stock issue increases funds and decreases the riskiness of the firm.  It as well tends to send a negat

Operating cycle, how can an operating cycle be applied to a poultry busines...

how can an operating cycle be applied to a poultry business

Explain the tests of controlor systems based auditing, Tests of controlor s...

Tests of controlor systems based auditing Tests to obtain audit evidence about effective operation of the accounting and internal control systems. It isn't concerned about deta

Define inventory is sometimes thought of as a necessary evil, Inventory is ...

Inventory is sometimes thought of as a necessary evil.  Explain. Inventory ties up funds and these types of funds are not earning an explicit return.  A few inventory is often es

Types of financial statement analysis, Q. Types of financial statement anal...

Q. Types of financial statement analysis? 1) External analysis This analysis is performed by external stakeholders like lenders, suppliers, investors, and governments. 2)

Brief introduction of asset backed security, An asset-backed security is a ...

An asset-backed security is a type of bond or note that is based on a pool of assets, or collateralized by the cash flows from a specified pool of underlying assets. As

Explain about deferred payment, Q. Explain about Deferred Payment? supp...

Q. Explain about Deferred Payment? suppose a person take a loan of a specified amount at a given rate of the interest. he wants to repay this loan together with the interest in

Sources of Finance, A regional division of a water company is upgrading its...

A regional division of a water company is upgrading its water filtration & purification plant; the new system is expected to last 20 years & to cost $40m. The parent company has ha

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd