Note: Although not absolutely necessary, you are advised to use a computer spreadsheet to work the following problem
a. Use the price data from the table that follows for the Standard & Poor's 500 Index, Walmart, and Target to calculate the holding-period returns for the 24 months from July 2007 through June 2009
					Month	S&P 500		Walmart	Target
					Jun 07	1503.35		46.32	61.86
Jul 07	1455.27		44.24	58.91
Aug 07	1473.99		42.22	64.28
Sep 07	1526.75		42.24	61.98
Oct 07	1549.38		43.75	59.83
Nov 07	1481.14		46.35	58.62
Dec 07	1468.36		46.20	48.88
Jan 08	1378.55		49.32	54.17
Feb 08	1330.63		48.21	51.56
Mar 08	1322.70		51.45	49.67
Apr 08	1385.59		56.63	52.07
May 08	1400.38		56.63	52.43
Jun 08	1280.00		55.12	45.68
Jul 08	1267.38		57.50	44.44
Aug 08	1282.83		58.17	52.26
Sep 08	1164.74		58.98	48.35
Oct 08	968.75		54.96	39.54
Nov 08	896.24		55.03	33.44
Dec 08	903.25		55.45	34.21
Jan 09	825.88		46.60	30.91
Feb 09	735.09		48.70	28.20
Mar 09	797.87		51.82	34.25
Apr 09	872.81		50.13	41.10
May 09	919.14		49.74	39.30
Jun 09	946.21		48.68	39.00
b. Calculate the average monthly holding-period returns and the standard deviation of these returns for the S&P 500 Index, Walmart, and Target.
					c. Plot(1) the holding-period returns for Walmart against the Standard& Poor's 500 Index, and (2) the Target holding-period returns against the Standard & Poor's 500 Index.
d. From your graphs in part c, describe the nature of the relationship between the stock returns for Walmart and the returns for the S&P 500 Index. Make the same comparison for Target.
					e. Assume that you have decided to invest one-half of your money in Walmart abd the remainder in Target. Calculate the monthly holding-period returns for your two-stock portfolio. (Hint: The monthly return for the portfolio is the average of the two stocks' monthly returns.
f. Plot the returns of your two-stock portfolio against the Standard & Poor's 500 Index as you did for the individual stocks in part c. How does this graph compare to the graphs for the individual stocks? Explain the difference.
					g. The following table shows the returns on an annualized basis that were realized from holding long-term government bonds for the same period. Calculate the average monthly holding-period returns and the standard deviations of these returns.( Hint: You will need to convert the annual returns to monthly returns by dividing each return by 12 months)
Month and Year			Annualized Rate of Return (%)
Jul 07			5.00
Aug 07			4.67
Sep 07			4.52
Oct 07			4.53
Nov 07			4.15
Dec 07			4.10
Jan 08			3.74
Feb 08			3.74
Mar 08			3.51
Apr 08			3.68
May 08			3.88
Jun 08			4.10
Jul 08			4.01
Aug 08			3.89
Sep 08			3.69
Oct 08			3.81
Nov 08			3.53
Dec 08			2.42
Jan 09			2.52
Feb 09			2.97
Mar 09			2.82
Apr 09			2.93
May 09			3.29
Jun 09			3.18