Problem 3:

Use the data from the following four actions to answer the questions below:

Yields

Year TLS DI PFE WMT

20x5 12.00% 4.50% 5.80% 11.30%

20x6 13.30% 5.30% 5.70% 9.00%

20x7 10.20% 3.10% 5.90% 13.90%

20x8 9.30% 2.70% 4.50% 14.80%

20x9 8.60% 1.90% 6.30% 15.00%

a. Classify the correlations between each pair of actions as positive correlation (CP), perfectly positive correlation (CPP), negative correlation (CN), perfectly negative correlation (CPN) and no correlation (SC): (12 points)

TLS - DI = DI - PFE =

TLS - PFE = DI - WMT =

TLS - WMT = PFE - WMT =

b. What are the three actions combined to build a diversified portfolio and why? It starts from the premise that there is an equal distribution of investment (33.3%) among the selected shares. (10 points)

C. Calculate the return, risk and coefficient of variation for the portfolio of three stocks selected in the previous exercise. It starts from the premise that there is an equal distribution of investment (33.3%) among the selected shares. (10 points)

(the process is need includes in excel)