Question 1. You have decided to construct your own index to measure consumer confidence. You have chosen the following three companies Wal-Mart Stores Inc (WMT), Target Corp (TGT) and Kroger Co. (KR). Using monthly prices from August 2008 through August 2010, Construct both a price weighted and value weighted index. Use a beginning index of 100 where appropriate. What are the monthly returns for your two indexes? Compare your returns to the DJIA and S&P 500 respectively. Do you have any comments on the returns?
Question 2. Discuss your belief on the concept of market efficiency. Do you believe markets are efficient? What are the implications of your belief? Whether you believe markets are efficient or not, explain how market anomalies can persist over time. How does behavioral finance issues impact the concept of market efficiency?
Question 3. Select any publicly traded company you like. Find that company on the yahoo finance site or any other site you prefer. Using the basic technical analysis tab, compare your company to the S&P 500 index and a competitor over the past year. How would you describe the performance of your stock relative to these two benchmarks?