Alabama State University Excel Stocks Worksheet

Description

Do Ford and GM Stocks (All information should be in the attached document which has instructions in it as well.)

1.Use the return data and follow the example in the slides of Chapter 2.4 to generate a scatterplot between the monthly return of the two stocks (Hint: you are generating A scatterplot between these two stock returns, so just one figure should be reported) (5 pt).Describe what relation you observed between the return of the two stocks (positive, negative or no relation; strong, moderate or weak). (5 pt)

2. Calculate the arithmeticmean, median, mode, range and MAD for the investment return in both of the stocks. Report the results clearly with THE FOMULAS YOU USED TO GET FULL POINTS to get full points. (10 pts)

3. Calculate the variance and standard deviation for returns of BOTH of the two stocks. Report the results clearly with THE FOMULAS YOU USED TO GET FULL POINTS to get full points (6 pts). Which sector has higher expected return, and which sector has higher risk? (4 pts)

4. Based on the mean, variance and standard deviation calculated in 2&3, calculate the coefficient of variation (CV) for investment returns for BOTH of the stocks (6 pts). Which stock is a better investment, suggested by CV? Report the results clearly with THE FOMULAS YOU USED TO GET FULL POINTS. (4 pts)

5. Suppose that you have invested in total of $10,000 in the two stocks, among which 40% is invested in stock one and 60% in stock two, based on the mean, variance and standard deviation calculated, calculate your portfolio expected return of the entire investment of $10,000 (Hint: Refer to section 5.2~5.3, particularly starting from page 24 of your Chapter 5 slides). Report your results with THE FOMULAS YOU USED TO GET FULL POINTS. (15 pts)

6. Use CORREL (array1, array2) function to calculate the correlation of investment return between the two stocks (6 pts). What relation does the covariance suggest of the returns of the two stocks? (4 pts)

7. Use the correlation you just calculated in 6 to calculate the portfolio variance (VAR(R_p)) of your entire investment of $10,000 (Hint: Use the formula on page 24 of Chapter 5 slides. You have already calculated the standard deviation of stock 1 (σ₁) and stock 2 (σ₂) in part3. ρ₁₂ is also calculated in part 6, which is the correlation. Also refer to the example on page 25 of Chapter 5 slides to calculate the weights w₁ and w_2.) Report your results with THE FOMULAS YOU USED TO GET FULL POINTS. (15 pts)

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