Reference no: EM131398551
Assignment: Risk and Return
Complete the following risk and return exercise.
The purpose of this exercise is to first provide experience in locating, understanding, and analyzing basic stock price data. In addition, the ultimate learning objective is to translate this data into standard measures of risk and return, and to learn how to find the Beta for a security.
1. Retrieve monthly price data for Apple, CVS and the S&P 500 (^GSPC) from Yahoo Finance for the past 2 years. Type in the ticker, then, click historical prices. You will need end of month prices.
2. Compute monthly Holding Period Returns (HPRs).
3. Calculate arithmetic means.
4. Calculate the standard deviation of the monthly HPRs.
5. Repeat steps 1-4 for 1 of the stocks you individually selected for your group portfolio.
6. Perform a linear regression for Apple, CVS, and for 1 of the stock's you individually selected for your group portfolio. Identify and briefly discuss all the Betas. In your discussion, compare the Betas to those found on Bloomberg and Yahoo Finance.
7. Submit your analysis by e-mail and hard copy.
8. Come to class prepared to discuss your interpretation of the results.
9. Only hard copies handed in will be graded so please be sure to submit organized and easy to follow work.
If you download the data from Yahoo, you will notice that the dates in your spreadsheet don't look like end of month dates. The prices are indeed the end of month prices. Put the closing prices into the Excel template provided. Now, you're ready to generate additional rows and columns to complete the calculations.
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