Homework
Problem A:
Get the last 5 years monthly adjusted close prices for Apple Inc. (AAPL), Advanced Micro Devices Inc. (AMD) and Nasdaq Composite Index (^IXIC) from yahoo finance.
a. Calculate monthly returns for each one.
b. Calculate the average monthly return and standard deviation for each stock and covariance between AAPL and AMD stocks.
c. Find the minimum variance portfolio weights, where the portfolio consists of AAPL stock and AMD stock (assume that the portfolio weights cannot be negative or above 100%). Also find the average return and standard deviation for the minimum variance portfolio. Use sample statistics throughout.
d. Assume monthly risk-free rate is 0.1%, annualized risk-free rate is 1.2% and market risk premium is 4%. Estimate Beta and Alpha for each stock (AAPL and AMD) and comment on stock performance based on Alpha.
e. Use Capital Asset Pricing Model (CAPM) and calculate expected return for AAPL and AMD.
Problem B:
Jacob just graduated from college and wants to plan for his retirement. He plans to work for 30 years, and then retire for the following 30 years. He expects to spend $120,000 in his first year of retirement, with a 3% annual growth rate. During his working-years he plans to increase savings at a rate of 5% per year. While working, his expectedreturn on his account is5%, and during retirement it will have a 4% return. After the 30th year of retirement, he wants to have $300,000 in his account. He currently has $10,000 in his retirement savings account.
To solve the problem, determine how much Jacob needs to save in year 1 to accomplish his retirement goals (use Solver or Goal Seek).
Format your homework according to the give formatting requirements:
a. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
b. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
c. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.