1. List the revised portfolio you created for yourself from Part 1 and part 2. You should list the portfolio with all assets including the dates you purchased the asset and amount you used indicating the percentage, i.e. allocation amount.
a. Calculate the annual holding return and annual holding yield of your portfolio.
b. Calculate the mean, variance, standard deviation, and coefficient of variation of your portfolio.
c. Calculate the mean, variance, standard deviation, and coefficient of variation of the Dow Jones Industrial Average (DJI) over the same period.
d. Compare and contrast your portfolio with the "market portfolio" from c. Be sure to include the concepts of the investors required rate of return, inflation rate, and security market line.
2. Look at exhibit 2.4. Take the quiz and score yourself on risk tolerance. You should indicate your answer to all ten questions within the exam.
a. Place yourself on the goals matrix. Explain the role of taxes on the goals matrix and specifically describe the importance of marginal tax rates.
b. Using this information look at question 9 on page 54 of the textbook. Replace Mr. Franklin with none other than you. Also, replace the 70 years of age with your age.
And finally replace the assets in the portfolio on page 55 with the assets you chose in 1, i.e. HW1 and HW2.
3. Choose the stock from the table below that has been assigned to you
a. Answer problems 1-4 on page 447 about this company.
4. Using CAPM estimate the expected return of three stocks (the one above your name and the one below your name from the table on your portfolio.
5. You will need to make many assumptions to do this. List your assumptions carefully with sound financial reasoning. (You may want to consider what the covariance of each of these three stocks is with your portfolio and what the risk is of your portfolio?)
6. Consider the company assigned to you in question 4 that you concluded would outperform the other two. What is the most notable and impactful competitor to that firm?
a. I like tax free bonds because I am in a high tax bracket. What type of bond do you recommend? Which exact bond should I buy? Provide a link so that I can access it and tell me what I will earn over the next two years.
b. Oops, I just lost my job. I still want to buy a bond but I don't care much about tax consequences anymore. Repeat a. for this scenario.
Attachment:- Portfolio Management.zip