Week 5 Knowledge Check

FIN 344 Excel Assignments

Assignment #1 – Risk and Returns for Stock

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Watch the Excel Video on “How to compute mean, standard deviation, etc”.

For your assigned firms, using monthly stock price data for 5 years:

1) Compute the mean, standard deviation, and coefficient of variance for each firm; and

2) Graph the monthly stock prices for each firm (on the same chart). Label the chart appropriately.

3) Compare the two firms which has the lowest standalone risk and best risk-to-return ratio. Discuss the meaning of the computations and graphs.

4) Provide your name and names of assigned firms

5) Submit one Excel Document.

Data Source: Yahoo!Finance, Mergent Online, or Bloomberg data

Assignment #2 – Compute Beta and Sharpe Ratio for Stock

Watch the Excel Videos on Computing Beta Coefficient (3 ways) and Computing the Sharpe Ratio

For your assigned firm, using monthly stock price data for 5 years (some period used in Assignment 1):

1) Compute the beta coefficient for each firm, using S&P 500 Index as the benchmark;

2) Compute the Sharpe Ratio for each firm;

3) Compare the two firms and discuss the meaning of the data (beta and Sharpe Ratio);

4) Compute the beta coefficient for the portfolio of both stocks (assume 50% for each stock).

Data Source: Yahoo!Finance, Mergent Online, or Bloomberg data