Homework: Finance Mini Case
This homework will require you to analyze time series of monthly returns for different securities.
o Calculate the MONTHLY return data for the 10/01/2017 - 09/30/2020 period for the selected three securities. Note: Return for Month 2 = (Adj Close for Month 2/Adj Close for Month 1) - 1
o Calculate the average arithmetic monthly return, variance, and standard deviation of returns for 10/01/2017 - 09/30/2020 period for the selected three securities. FIN 5130 Mini-case 1 Real-world Application: Risk and Return Dr. Darshana Palkar Page 2 of 2
o Calculate the covariance and correlation of returns between Company A and Company B for the 10/01/2017 - 09/30/2020 period. What does the correlation indicate?
o Calculate the stock betas for Company A and Company B for the 10/01/2017 - 09/30/2020 period. What do the betas indicate? Hint: What is a proxy for the market portfolio? What should go in the known-xs array and what should go in the known-ys array?
o Suppose you invest 50% in Company A and 50% in Company B. What is your portfolio average return and standard deviation?
o Compare the average return and standard deviation of Company A and Company B from #4 with the portfolio average return and standard deviation from #7. What do you observe? What can you conclude from your findings?
Format your homework according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.
Attachment:- Mini-Case-Finance.rar