I need help in this finance practice question!

Choose any 5 Canadian stocks.

a.Find weekly returns of each stock for the past year (you must have returns 50 returns for each stock). Find the historical mean of the returns of each stock and find the covariance matrix V of the chosen 5 stocks.

b.Assume that the annual risk-free rate is 1.1% and consider an investor whose coefficient of risk aversion equals to 2. Use the formula in the Appendix below (based on the Markowitz model) to find the optimal weight of each stock and T-bills in the complete portfolio of the investor. Which stock has the highest weight? How do you explain it? Does any stock have a negative weight? Why?

c. Find the expected return and the Sharpe ratio of your optimal complete portfolio. (Hint: The expected return of the portfolio is given by rfYT bill + YTE, the variance is equal to YTVY, where Y is the vector of weights excluding T-bills, E is a vector of expected returns excluding risk-free rate.)

d.Following the Markowitz model, assume that risky securities in your complete portfolio (found in question b) are the part of optimal risky portfolio P. Find the weight of each risky security in portfolio P and the weight of portfolio P in the complete portfolio.

Use this index as a market portfolio.

First, run linear regression analysis for each stock above to find its beta (Hint: Activate Analysis ToolPak and use it to run a regression).

Second, run linear regression analysis of means of historical returns of stocks versus betas of stocks found in the first step.

Appendix.

Let y T = (y1, ..., yn) be an array of weights of risky securities in complete portfolio C, RPT = (E(r1)rf , ..., E(rn)rf ) be an array of risk premiums of risky securities, then y T = 1 A RPTV1 , where V1 is the inverse covariance matrix

PLEASE ANSWER THE ALL PARTS!

The file on excelshould include your answers to all questions, tables and formulas used in calculations. Use a new page in your excel file for each question in the project.