Pick two stocks, say Walmart and IBM. Look at their monthly closing prices for last 4 years and

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Pick two stocks, say Walmart and IBM. Look at their monthly closing prices for last 4 years and

  • a. Calculate Beta for each of them
  • b. Using the CAPM model, calculate the expected return for each. Assume a market risk premium of 8% and risk free rate of 4%.
  • c. Calculate the standard deviation for each stock
  • d. Calculate the correlation coefficient between the two stocks
  • e. Form portfolios of the two stocks by changing their weights between zero and hundred percent and measure the risk and return of those portfolios
  • f. Using excel, graph the efficient frontier.
    • 8 years ago
    • 30
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