Prior to beginning work on this assignment, read Chapters 1-3 in your textbook. The assignments in this class will focus on using statistical tools and techniques to examine the performance of a financial portfolio. This week you will develop a portfolio consisting of five financial instruments, a 12-month history of values, and a statistical description of the portfolio's performance. This portfolio will be the framework for each of the weekly assignments. It is recommended that you select the financial instruments for your portfolio by Day 4. Before you begin, review the example Download example. You have $50,000 to allocate to a portfolio, with a goal of an overall annual ROI of 10%. Note the securities must be purchased as of December 31, 2015, and will need the end of month values for the calendar year 2016. You must allocate 100% of your portfolio to the following securities:

• $10,000 in shares of a publicly traded company
• Ten corporate bonds worth $10,000
• $10,000 in one mutual fund that reflects your investment style
• $10,000 of puts and/or calls of one option of your choosing (just make sure it is at least 12 months out)
• $10,000 in a 12-month or longer CD

In the Student Worksheet Download Student WorksheetExcel file, develop a table showing the five instruments, the initial purchase value ($10,000), and the monthly ending values for the calendar year 2016. The file has a blank format on the Data tab for you to complete.

In Tab 1 of your Student Worksheet Download Student Worksheet, complete the following:

• Develop some appropriate descriptive statistics for both the annual component (rows) and monthly (column) performance of your portfolio. Explain what these values tell you about your portfolio's performance. Determine the statistics that are most valuable. Determine the statistics that are least valuable.
• Examine the changes in the monthly total values and the to-date ROI values. Explain what the simple interest is and the compound interest earned at the end of each month and over the year. Conclude if the portfolio met the goal of an annual ROI of 10%.
• For each component, measure the return over the 12 months. Explain what the simple is and compound interest earned at the end of each month and over the year. Conclude if the portfolio met the goal of an annual ROI of 10%.
• Assume that this portfolio consists of a random sample of each investment group and we are interested in making an inference about the populations, critique what, if anything, would need to be changed in our estimates.
• Summarize the insights you have gained about using descriptive statistics to evaluate your portfolio's performance.