Question: 1. (Asset allocation) Visit the Financial Times Web site and refer to the article "A step-by-step guide to asset allocation" to apply the six main steps on asset allocation on a portfolio of shares of your choice listed on the Shanghai Stock Exchange. Do you think that all individual investors can apply these steps? Why or why not?
2. Expected return, standard deviation, and capital asset pricing model) The following are the end-of-month prices for both the Standard & Poor's 500 Index and Nike's common stock.
a. Using the data here, calculate the holding-period returns for each of the months
b. Calculate the average monthly return and the standard deviation for both the S&P 500 and Nike
c. Develop a graph that shows the relationship between the Nike stock returns and the S&P 500 Index. (Show the Nike returns on the vertical axis and the S&P 500 Index returns on the horizontal axis as done in Figure 6-5.)
d. From your graph, describe the nature of the relationship between Nike stock returns and the returns for the S&P 500 Index.