PLEASE ANSWER QUESTION NUMBER 2. QUESTION 1 IS JUST FOR REFERENCE

1. You want to form a portfolio between two stocks: Canadian Tire and the Apple Inc. Download the monthly price data from Yahoo! Finance pages for Canadian Tire (ticker symbol: CTC- A.TO) and Apple (ticker symbol: AAPL) from Jan 1, 2016 to Dec 31, 2021. 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:

a. 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?

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

1. 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.

2. 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)

3. Calculate the Canadian Tires weight in the portfolio that gives the minimum

   standard deviation: 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)?