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

Calculate the ex-right stock price, DIY Inc. plans to raise $200,000 with a...

DIY Inc. plans to raise $200,000 with a right offering. The current stock price is $100 and there are 80,000 shares outstanding. a. If DIY sets the subscription price to be $80

Price supports or acreage limitation programs cost society, Suppose the gov...

Suppose the government wants to increase farmers’ incomes.  Why do price supports or acreage limitation programs cost society more than simply giving farmers money? Price acrea

What do you signify by cost of capital, Q. What do you signify by Cost of C...

Q. What do you signify by Cost of Capital? What do you signify by 'Cost of Capital'? What is its meaning and what are the problems in determination of cost of capital? Ans.

Define risk adjusted discount rate enhance capital budgeting, Explain how u...

Explain how using a risk-adjusted discount rate enhances capital budgeting decision making compared to by using a single discount rate for all projects? The risk-adjusted disco

Define the benefits of the jit inventory control system, What are the benef...

What are the benefits of the JIT inventory control system? The just-in-time that is abbreviated as JIT inventory control system lowers inventory carrying costs and tends to inc

Investment strategy of hedge funds, Investment Strategy OF HEDGE FUNDS ...

Investment Strategy OF HEDGE FUNDS After the Funds are raised from genuine investors, the next step for Hedge Funds is to invest them as per the investment objectives and strat

Explain taxonomy of financial intermediaries, Taxonomy of financial interme...

Taxonomy of financial intermediaries We start by looking at the USA, the largest economy and financial system in the world. Subsequently we will turn to other countries. In the

Employees’ provident fund, Employees' Provident Fund (EPF) The Employee...

Employees' Provident Fund (EPF) The Employees' Provident Fund (EPF) Act, 1952 is the earliest legislation related to old age income security in India. It is a contributory prov

Simple average of the outcomes - time constraint, 1. Your welfare depends o...

1. Your welfare depends on how much time you travel T and how much time you play P and is the product of the two, i.e.,  W = T * P (a) The total amount of time you have is 10 ho

Define burden of a tax is shared by producers and consumers, The burden of ...

The burden of a tax is shared by producers and consumers.  Under what conditions will consumers pay most of the tax?  Under what conditions will producers pay most of it?  What det

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