# Go to a site like finance.yahoo.com or a similar site and download 5 years of monthly closing

## Question:

Go to a site like finance.yahoo.com or a similar site and download 5 years of monthly closing prices for 5 of the above companies (Historical Data). Download the data into an Excel file, and use the Adjusted-Close prices, which adjust for dividend payments:

Answer the following

1) Calculate the monthly rate of return for each price series. Use the full range of available data?

2) Using the Excel functions, calculate the sample standard deviation (STDEV.S) for each firm?

3) Using Excel's correlation function, construct the correlation matrix for the 5 stocks based on their monthly returns for the entire period?

4) What are the lowest and the highest individual pairs of correlation coefficients? What this implies about the benefits of diversification. Determine whether a portfolio of 5 large U.S. companies would be considered diverse?

5) Compare 2 other investment opportunities where greater diversification benefits might be present?

**Related Book For**

## Fundamentals of Financial Management

ISBN: 978-1337395250

15th edition

Authors: Eugene F. Brigham, Joel F. Houston