a Alcoa AA 25 Home Depot HD 25 International Business
a. Alcoa (AA) (25%), Home Depot (HD) (25%), International Business Machines (IBM) (25%), Travelers (TRV) (25%)
b. AA (10%), HD (50%), IBM (20%), TRV (20%)
c. AA (30%), HD (20%), IBM (10%), TRV (40%)
d. Which portfolio would a gambler choose? Explain.
e. Which portfolio would a risk-averse investor choose? Explain.

We have recorded the monthly returns for the following Dow Jones Industrials 30 stocks listed on the New York Stock Exchange for the period January 2008 to December 2012:
3M (MMM), Alcoa (AA), American Express (AXP), AT&T (T), Bank of America (BAC), Boeing (BA), Caterpillar (CAT), Chevron (CVX), Cisco Systems (CSCO), Coca-Cola (KO), Disney (DIS), Du Pont (DD), Exxon (XOM), General Electric (GE), Hewlett-Packard (HPQ), Home Depot (HD), Intel (INTC), International Business Machines (IBM), Johnson & Johnson (JNJ), JP Morgan Chase (JPM), McDonald’s (MCD), Merck (MRK), Microsoft (MSFT), Pfizer (PFE), Proctor & Gamble (PG), Travelers (TRV), United Technologies (UTX), United Health (UNH), Verizon Communications (VZ), Wal-Mart Stores (WMT).


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