Question: Help Please... The relevant data sets are provided to you at the bottom of this sheet, regarding two competitor stocks: China Eastern Airlines (CEA) and

Help Please...


The relevant data sets are provided to you at the bottom of this sheet, regarding two competitor stocks: China Eastern Airlines (CEA) and China Southern Airlines (ZNH). Based on the given data, you shall calculate the following measures to answer the following questions: 1) If each of these two stocks is considered stand-alone only, what is the "coefficient of variation" over the past decade for each stock's return, respectively? 2) If portfolio diversification strategies are feasible, what shall be the long-term expected return in market equilibrium (determined by the CAPM) for each stock, respectively? 3) Based on your findings in 1) and 2), what shall be the market-risk-adjusted excess return ("Alpha") for each stock, respectively? 4) Based on all above findings: Over the past 5 years, if each stock is stand-alone only, which stock has performed relatively better (i.e., with a more favorable risk-return tradeoff)? If each stock is combined with other stocks in portfolio, which stock has performed relatively better (i.e., with a more favorable risk-return tradeoff)?CEA stock prices, monthly, 12/2015-11/2020 ZNH stock prices, monthly, 12/2015-11/2020 CEA Historical Beta [SY monthly) ZNH Historical Beta (5Y monthly) 0.85 1.80 Date Adj Close Date Adj Close 12/1/15 $26.60 12/1/15 $35.83 1/1/16 $22.83 1/1/16 $28.14 5&P 500 stock return, 1928-2019 annual avg. US T-bond return, 1928-2019 annual avg. 2/1/16 $22.29 2/1/16 $26.56 11.57% 5.15% 3/1/16 $25.20 3/1/16 $29.34 4/1/16 $24.95 4/1/16 $28.97 5/1/16 $25.42 5/1/16 $27.81 6/1/16 $23.95 6/1/16 $26.75 7/1/16 7/1/16 $31.75 3/1/16 $24.52 8/1/16 $28.65 9/1/16 $21.90 9/1/16 $26.97 10/1/16 $21.37 10/1/16 $26.91 11/1/16 $23.04 11/1/16 $27.53 12/1/16 $21.48 12/1/16 $24.63 1/1/17 $24.17 1/1/17 $27.75 2/1/17 $26.54 2/1/17 $31.26 3/1/17 $27.48 3/1/17 $25.13 4/1/17 $31.32 5/1/17 $28.21 5/1/17 $36.74 6/1/17 $29.41 6/1/17 $39.67 $26.89 7/1/17 $37.19 8/1/17 $26.72 8/1/17 $37.65 $23.77 9/1/17 $33.52 10/1/17 $24.78 10/1/17 $36.07 11/1/17 $28.70 11/1/1 $43.86 12/1/1 $35.15 12/1/17 $50.54 $43.69 1/1/18 $63.10 2/1/1 $41.15 2/1/18 $64.48 $35.79 3/1/18 $51.33 $39.5 4/1/18 $52.73 $38.22 5/1/18 $48.06 /1/18 $33.21 6/1/18 $38.55 $30.54 7/1/18 $35.10 8/1/1 $31.40 8/1/18 $32.94 $31.37 9/1/18 $31.70 10/1/18 $27.64 10/1/18 $27.11 11/1/1 $30.89 11/1/18 LG'EES 12/1/18 $26.91 12/1/18 $30.04 /1/19 $30.33 1/1/18 $35.49 2/1/1 $31.5 2/1/15 $40.01 3/1/1 $33.77 3/1/1 $43.05 4/1/1 $33.81 4/1/15 $42.54 5/1/1 $26.94 5/1/15 $31.51 6/1/1 $28.91 6/1/19 $33.94 7/1/1 $27.00 7/1/15 $32.38 8/1/1 $23.19 8/1/15 $28.22 9/1/19 $23.72 9/1/19 $30.05 10/1/19 $24.31 10/1/19 $30.93 11/1/15 $24.91 11/1/19 $31.44 12/1/19 $26.90 12/1/15 $33.60 1/1/2 $22.40 1/1/20 $27.61 2/1/20 $21.05 2/1/20 $26.78 3/1/20 $17.09 3/1/20 $21.72 4/1/20 $19.38 4/1/20 $25.17 5/1/20 $17.08 5/1/20 $20.84 6/1/20 $17.81 6/1/20 $22.09 7/1/20 $17.41 7/1/20 $22.94 8/1/20 8/1/20 $26.21 9/1/20 $21.60 9/1/20 $27.19 10/1/20 $19.65 10/1/20 $26.82 11/1/20 $20.89 11/1/20 $28.60
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