ONLY ANSWER QUESTION 2,BUT YOU MIGHT NEED SOME INFORMATION FROM QUESTION1 !THANKS!

1. You want to form a portfolio between two stocks: Canadian Tire and the Apple Inc. Download the monthly price data fromYahoo! Finance pages for Canadian Tire (ticker symbol: CTC-A.TO) and Apple (ticker symbol: AAPL) from November 1, 2014 to November 1, 2019. Calculate the monthly holding period returns for each stock in Excel using the split-adjusted prices that Yahoo provides1. Use these data and Excel to answer the following questions:

• What are the average monthly return and standard deviation of returns for Canadian Tire? What are the average monthly return and standard deviation of returns for the Apple? Does risk-return relationship (trade-off) hold between these two stocks?

• Using these values, calculate the portfolio return and standard deviation for various weights in Canadian Tire and Apple:

o Calculate the portfolio return and standard deviation for weights with alternately 0%, 5%, 10%, 15%,...., 95%, 100% weight in Apple and the rest in Canadian Tire. o Graph this portfolio return and standard deviation for all possible portfolios on a graph with Return on the vertical axis and Standard deviation on the horizontal

axis. (hint: Use Scatter Plot type of graph) o Calculate the Canadian Tires weight in the portfolio that gives the minimum

standard deviation (hint: try using solver or manual trial and error); show this portfolio on a graph built above.

2. Estimate the beta for only one of the stocks above (choose AAPL or CTC-A.TO). In order to do so, use monthly returns for the AAPL or CTC-A.TO calculated in part 1 above. In addition, retrieve the values of market portfolio: use S&P 500 index (ticker symbol ^GSPC). Using monthly levels of the S&P 500 index, compute monthly holding period returns for market portfolio (see calculating holding period returns for CTC-A.TO and AAPL in part 1). Estimate beta for chosen stock (CTC-A.TO or AAPL), by running the regression of this stocks monthly excess returns2 on the market portfolio excess returns (In Excel go to Tools / Data Analysis / Regression; make sure that Data Analysis add-in is installed on your computer). Is the beta positive or negative? Is it statistically different from zero? How can you tell (why)?

1 Tip: When you enter the ticker symbol and hit Go you will be redirected to the page corresponding to the stock specified by ticker. From the menu choose link to the Historical Data. You will see the link Download Data which will create a comma-delimited (*.csv) file. Excel can open CSV files directly.