Go to finance.yahoo.com , and find the monthly rates of return over a 2-year period for five
Question:
Go to finance.yahoo.com, and find the monthly rates of return over a 2-year period for five companies of your choice. Now assume you form each month an equally weighted portfolio of the five firms (i.e., a portfolio with equal investments in each firm). What is the rate of return each month on your portfolio? Compare the standard deviation of the monthly portfolio return to that of each firm and to the average standard deviation across the five firms. What do you conclude about portfolio diversification?
2.Return to the monthly returns of the five companies you chose in the previous question.
Using the Excel functions for average (AVERAGE) and sample standard deviation (STDEV), calculate the average and the standard deviation of the returns for each of the firms.
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown