1. You will find a template for daily adjusted closing price for AMD corporation’s stock from 12/31/2004 to 12/31/2014. a. Compute the daily stock returns and graph them (as we did in class). b. Use the Excel function Frequency to build a frequency distribution of the stock returns between – 9% and 9% (1% incremental) and graph this distribution (as we did in class).
Question#2 You will find a template with data on annual stock prices for Kellogg and Ford for 1995 and 2014. a. Graph the annual stock returns of Kellogg and Ford on the same graph. b. Compute the annual average return and the standard deviation of annual returns for Kellogg and Ford.
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Question#3 Suppose that the return statistics for stocks A and B are as indicated in the excel file. What is the standard deviation of the minimum variance portfolio?
Question#4 Economists have long believed that the greater the amount of money printed, the higher the long-term interest rates. Evidence for this view can be found in the corresponding excel worksheet, which gives long -term government bond rate for 31 countries and the growth rate of money supply for each country. a. Plot the data, and use a regression to find the relation between the money growth and the long-term bond interest rate. b. If a country has zero money growth, what is the predicted long-term bond interest rate? c. The monetary authorities in your country are considering increasing the money growth rate by 1% from its current level. Predict by how much this will increase the long-term bond interest rate.
Question#5 The template for this exercise gives price information and market cap for 10 companies. Compute the stock returns and the individual regressions of returns on the S&P 500 index. Use this data to construct a valueweighted portfolio. Show that R-squared of the regression of the portfolio returns on S&P 500 is greater than the value-weighted average R-squared of the individual stocks.
Question#6 (Extra Credit 10 pts) Here are data on the stock prices and returns of General Electric (GE), Boeing (BA), and Walmart (WMT). Please fill in the blanks in the corresponding excel worksheet.