1. Using all the daily data for the S&P 500 in the image below, please measure the S&P 500 annualized volatility, expected S&P 500 return, and expected S&P 500 excess return assuming:
   • The Sharpe Ratio for the S&P 500 equals .3
   • There are 252 trading days in a year.
   • The one-year risk-free rate equals 4.7%
2. Now, lets assume you manage an S&P 500 index fund and are ONLY willing to consider additional strategies that increase expected return without increasing overall portfolio risk. A hedge fund manager proposes you allocate 25% of your assets to her fund which has the following risk characteristics:

Beta to the S&P 500 = 0.4

Volatility = 20%

Expected Alpha = 5%

Correlation with the S&P 500 = .40

Taxes are not a consideration. Would you make the investment? Why or why not?

1. What would the alpha on the hedge fund have to be for you to change your decision?
2. Using the daily data for the S&P 500 and P&G in the image, please measure the annualized PG volatility, correlation with the S&P 500, Beta and Expected Return assuming an Alpha of zero.
3. If you were to follow the same criteria for the 25% allocation to PG as a 25% allocation to the Hedge Fund referenced in 1b, what minimum Alpha for PG would you need to consider the decision.

I need answers in Excel sheet. Thanks for help