A bond portfolio with $1 million invested in zero coupon Treasury bonds that mature in 10 years.

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Question:

An investment of $2 million in Home Cook, a firm that delivers ready-to-cook meals

George is intrigued by the home-delivery food industry, and is also looking at Late Date, which delivers a ready-to-bake semi-gourmet line for up-scale midnight snacks. These snack kits can also be used for school fund-raisers, and have proven to be wildly popular with helicopter parents. You have been given the last year’s monthly data for these companies as well as for the market.

Month	Market	Home Cook	Late Date
1	0.25	0.27	0.09
2	0.27	0.25	0.05
3	0.19	0.23	0.14
4	0.19	0.18	0.16
5	0.14	0.04	0.21
6	0.10	0.21	0.15
7	0.16	0.22	0.17
8	-0.10	-0.20	-0.27
9	-0.03	-0.15	-0.19
10	0.18	0.28	0.22
11	0.15	0.22	0.09
12	0.12	0.19	0.19

Analyze his current portfolio, showing average returns, standard deviation, and coefficient of variation, correlation and beta. (Hint: use the information in the narrative to determine the portfolio weights of his Home Cook and T-bill holdings!) Calculate the betas and derive them using the graphing method.