Question: 3. Question Part C (40 Marks) Mr. Morris had $100,000 in his account. Using this fund, he made a portfolio of two NYSE listed stocks

  1. 3. Question Part C (40 Marks)

    Mr. Morris had $100,000 in his account. Using this fund, he made a portfolio of two NYSE listed stocks General Electric and Pfizer on 01 Jan 2019 in the ratio of 60:40, i.e. 60% funds in General Electric & 40% funds in Pfizer.

    The daily stock data of both stocks can be found on market websites such as finance.yahoo.com. Download daily data for 1 year from 1 Jan 2019 1st Oct 2021.

    Using the stock data of the two stocks, you are required to explain the below concepts and then compute for the given stocks:

    • Annual return of both General Electric and Pfizer (5 marks)

    • Annualized standard deviation of returns of both General Electric and Pfizer (5 marks)

    • Correlation coefficient of returns of General Electric and Pfizer. What does this correlation

      coefficient signify about the correlation of the two stocks and corresponding decision from an investor? (5 marks)

    • Portfolio return of the portfolio of two stocks. (5 marks)

    • Portfolio risk (standard deviation) of the portfolio of two stocks. (5 marks)

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