FIANANCIAL MAMGEMENT ASSIGNMENT
Select stocks of three publicly traded companies from different industries. I am thinking about looking at Best Buy, Chevron and Amazon. I would give some background information about them and reasons why I choose them
Paragraph 1 & 2 - This is where I will begin to dive into the financials of the three companies and go over the
1. Calculate the monthly rate of return of the stocks
2. Calculate the mean, variance, and standard deviation of the stocks
3. Calculate the correlation coefficient between every possible pair of stocks' returns
Paragraph 3 - How much would I invest.
• The decision of what percentage of money (weights) I want to invest in each stock
Paragraph 4
• Calculate my portfolio's mean monthly return, variance, and standard deviation
Paragraph 5
• Financial outlook of my portfolio under different circumstance such as a 10% loss or an investment of $100,000.
This is complete write up of your portfolio formation in a Word file, with calculations copied and pasted in it from your Excel file.
1. Select the stocks of three publicly traded companies from different industries. State the criteria for selecting those securities.
2. Retrieve monthly data on adjusted closing prices of your securities from Yahoo Finance for the past 10 years and calculate the monthly rate of return of the stocks for every month.
3. Calculate the mean, variance, and standard deviation of the stocks' monthly returns.
4. Calculate the correlation coefficient between every possible pair of stocks' returns.
5. Decide what percentage of your money (weights) you want to invest in each stock and state the criteria you used to select those weights.
6. Now calculate your portfolio's mean monthly return, variance, and standard deviation.
7. Assuming your portfolio return follows a normal distribution, calculate the chance that your portfolio loses 10% of its value during any month?
8. Assuming you have invested $100,000 in your portfolio, what is value at risk (VaR) of your portfolio at any particular month at 99% confidence level?
9. Now randomly change your portfolio's weights 100 times (note total weights should always be 100%), for each weight combination calculate the mean and standard deviation of your portfolio, and then draw the efficient frontier.
10. For each item mentioned above explain your rationale and cite peer-reviewed and/or seminal sources.
Provide your explanations and definitions in detail and be precise. Comment on your findings. Provide references for content when necessary. Provide your work in detail and explain in your own words. Support your statements with peer-reviewed in-text citation(s) and reference(s).
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.
Attachment:- CLA-Practice.rar