Question 1 (40 points)

Use the DATA in the attached file that includes the prices of stocks traded on NASDAQ and the MARKET INDEX (NASDAQ 100 - PRICE INDEX) to calculate the following:

a-Calculate the Beta for the five stocks.

b-Calculate the Coefficient of Variation(CV) of the five stocks.

c-Calculate the required rate of return for each of the five stocks using the CAPM model. Note the US 3 months T-bill rate is 4.25%.

d-Which stock has the least total risk? Which stock has the least systematic risk?

e-Which stock would you choose based on the comparison of the average return with the required rate of return?

f-You have a $50,000 portfolio consisting of five stocks. You put $10,000 in the two first stocks, $12,000 in the third and fourth stock and the rest in the fifth stock. What is your portfolio beta?

g-Calculate the portfolio beta of the two first stocks in the data sheet (to determine the weights for stock one (w1) = the two last decimals of your ID and weight for stock 2(w2) =the rest). If your ID ends with 55% then the weight for the first stock is = 55% and the weight for the second stock is 45%.

	NASDAQ 100 - PRICE INDEX	MASTERCARD	BANK OF AMERICA	DYCOM INDS.	COCA COLA	PFIZER
NASDAQ 100 - PRICE INDEX	0.00032657
MASTERCARD	0.0002971	0.00053236
BANK OF AMERICA	0.00025516	0.00037371	0.00064884
DYCOM INDS.	0.00034613	0.00046788	0.00053844	0.0017407
COCA COLA	0.00014312	0.00021638	0.00022495	0.00023813	0.00023141
PFIZER	0.00012442	0.00015978	0.00017243	0.00017418	0.00012676	0.00034134

Column1		Column2		Column3		Column4		Column5		Column6
Mean	0.000635702	Mean	0.0003809	Mean	0.00037836	Mean	0.00190881	Mean	0.00024568	Mean	0.00041966
Standard Error	0.000658995	Standard Error	0.00084138	Standard Error	0.00092888	Standard Error	0.00152143	Standard Error	0.00055473	Standard Error	0.00067373
Median	0.001263207	Median	0.00028528	Median	0	Median	0	Median	0.00055107	Median	0
Mode	0	Mode	0	Mode	0	Mode	0	Mode	0	Mode	0
Standard Deviation	0.018083391	Standard Deviation	0.02308816	Standard Deviation	0.02548933	Standard Deviation	0.04174944	Standard Deviation	0.01522219	Standard Deviation	0.01848769
Sample Variance	0.000327009	Sample Variance	0.00053306	Sample Variance	0.00064971	Sample Variance	0.00174302	Sample Variance	0.00023172	Sample Variance	0.00034179
Kurtosis	5.966082687	Kurtosis	7.9130634	Kurtosis	10.0222604	Kurtosis	12.2620194	Kurtosis	7.10760326	Kurtosis	4.32697524
Skewness	-0.459370553	Skewness	0.43925178	Skewness	0.44341229	Skewness	-0.1829599	Skewness	-0.7039352	Skewness	0.41553395
Range	0.222654334	Range	0.29336374	Range	0.33193548	Range	0.57647679	Range	0.16152057	Range	0.18589793
Minimum	-0.121932245	Minimum	-0.1272545	Minimum	-0.1539735	Minimum	-0.2916667	Minimum	-0.0967248	Minimum	-0.0773461
Maximum	0.100722089	Maximum	0.1661092	Maximum	0.17796197	Maximum	0.28481013	Maximum	0.0647958	Maximum	0.10855188
Sum	0.478683373	Sum	0.28682115	Sum	0.28490311	Sum	1.43733427	Sum	0.18499344	Sum	0.31600062
Count	753	Count	753	Count	753	Count	753	Count	753	Count	753