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

Cash flow estimation and risk ananlysis.., as a financial analyst, you must...

as a financial analyst, you must evaluate a proposed project to produce printer ink. the equipment would cost 60000 plus 10000 for installation. annual sales would be 5000 units at

Uses of index numbers, Uses of Index Numbers 1. Establishes trends ...

Uses of Index Numbers 1. Establishes trends Index numbers when analyzed reveal a general trend of the phenomenon under study. The available figures for inflation based

Operation management, Select a business with which you are familiar and ide...

Select a business with which you are familiar and identify examples of customers using search, experience, and credence quality to evaluate the good or service

Constructing synthetic swaps, (a) Prior to FAS 133 if companies qualified ...

(a) Prior to FAS 133 if companies qualified for hedge accounting their hedges were assumed to be perfect-no valuation or testing required. Currently under FAS 133 risk managers se

Virements, what is the relevance of virements to public sector accounting

what is the relevance of virements to public sector accounting

Explain the term- trade receivable days, Explain the term- Trade receivable...

Explain the term- Trade receivable days (turnover) [Yearend trade receivables/Credit sales (or turnover)] x   365days It is the average length of time taken by customers t

Present value, Present V alue This is the current value of a fu...

Present V alue This is the current value of a future payment or stream of payments. The present value is calculated by applying a discount (capitalization) rate to the

Dividend policies, explain for factors influencing design for dividend poli...

explain for factors influencing design for dividend policies

Computation of the cost of capital, Q. Computation of the cost of capital? ...

Q. Computation of the cost of capital? Computation of overall cost of capital of the firm invoices Cost of debts: debt may be issued at par , at premium or discount it may

Delivery and credit risk, When a borrower uses repo market for fund f...

When a borrower uses repo market for fund financing, he has to deliver the securities to the lender. One way to do this is to deliver the collateral to the lender

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