what is the answer for question part 1 A.Compute the rate of return for each company for each month.

B.Compute the average rate of return for each company.

C.Compute the standard deviation of the rate of return for each company

D.Compute the correlation coefficient between all possible pairs of securities.

E.Compute the average return and standard deviation for the following portfolio:

1/2 A + 1/2 B

1/2 A + 1/2 C

1/2 B + 1/2 C

1/3 A + 1/3 B + 1/3 C

Plot the risk and return of all portfolios and indicate the efficient frontiers

Problem 1: Below is actual price and dividend data for three companies for each of 7 months. Period 1 2 3 4 5 6 7 Security A Closing Price 27 29 29 25 26 29 30 Dividend 0.25 0.25 Security B Closing Price Dividend 33 36 36 0.35 32 38 38 0.35 39 Security C Closing Price Dividend 16 18 14 0.4 15 16 17 0.4 17 A. B. C. D. E. Compute the rate of return for each company for each month. Compute the average rate of return for each company. Compute the standard deviation of the rate of return for each company Compute the correlation coefficient between all possible pairs of securities. Compute the average return and standard deviation for the following portfolio: 1/2 A + 1/2 B 1/2 A + 1/2 C 1/2 B + 1/2 C 1/3 A + 1/3 B + 1/3 C F. Compute minimum variance portfolio for each pair of securities. G. Plot the risk and return of each portfolio and identify the efficient frontiers. Problem 2: Part One: Monthly return data are presented below for each of three stocks and the S&P index (corrected for dividends) for a 12-month period. Calculate the following quantities: A. Expected monthly rate of return for each security. B. Standard deviation for each security. C. Covariance between the rates of return for AC, AB, BC, and each security with S&P500. D. The correlation coefficient between each security and the market. Month 1 2 3 4 5 6 7 8 Stock A 0.12 0.15 -0.04 0.0157 0.0316 0.028 -0.089 -0.012 Stock B 0.15 0.03 0.055 0.0456 0.037 0.1 0.054 -0.03 Stock C 0.3 0.15 0.1 -0.14 0.32 -0.01 -0.2 0.1 S&P500 0.13 0.06 0.02 0.045 0.044 0.043 -0.067 -0.02 9 10 11 12 0.01 0.1275 0.0748 -0.01 0.02 0.1 0.04 0.015 0.11 0.06 -0.05 0.08 0.035 0.062 0.025 -0.012 Part two: Calculate the followings: A. Alpha for each stock. B. Beta for each stock. C. The standard deviation of the residuals from each regression. D. What are the systematic and nonsystematic risk of the each security and the portfolio? E. Which stock has higher firm-specific risk? F. Which stock has greater systematic risk? G. Which stock has higher R-square? H. For which stock does market movement explain a greater fraction of return variability? I. For which stock had an average return in excess of that predicated by the CAPM? J. Plot the relationship between risk and return and identify each under value or overvalue security. You need to present your results neatly in excel