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Homework answers / question archive / You want to form a portfolio between two stocks: Canadian Tire and the Apple Inc

You want to form a portfolio between two stocks: Canadian Tire and the Apple Inc

Finance

You want to form a portfolio between two stocks: Canadian Tire and

the Apple Inc. Download the monthly price data fromYahoo! Finance pages for Canadian Tire (ticker symbol: CTCA.TO) and Apple (ticker symbol: AAPL) from November 1, 2014 to November 1, 2019. Calculate the monthly holding period returns for each stock in Excel using the split-adjusted prices that Yahoo provides. Use these data and Excel to answer the following questions: a. What are the average monthly return and standard deviation of returns for Canadian Tire? What are the average monthly return and standard deviation of returns for the Apple? Does risk-return relationship (trade-off) hold between these two stocks? b. Using these values, calculate the portfolio return and standard deviation for various weights in Canadian Tire and Apple: a. Calculate the portfolio return and standard deviation for weights with alternately 0%, 5%, 10%, 15%,...., 95%, 100% weight in Apple and the rest in Canadian Tire. b. Graph this portfolio return and standard deviation for all possible portfolios on a graph with "Return" on the vertical axis and "Standard deviation" on the horizontal axis. (hint: Use Scatter Plot type of graph) c. Calculate the Canadian Tire's weight in the portfolio that gives the minimum standard deviation: show this portfolio on a graph built above. Tip: When you enter the ticker symbol and hit "Go" you will be redirected to the page corresponding to the stock specified by ticker. From the menu choose link to the "Historical Data". You will see the link "Download Data" which will make a comma-delimited (*.csv) file. Excel can open CSV files directly.

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