Question: Risk and Return using EXCEL Use the following data to explore the return-risk relation and the concept of beta for Apple stock, JPMorgan…

Question:Risk and Return using EXCEL

Use the following data to explore the return-risk relation and the concept of beta for Apple stock, JPMorgan Chase & Co stock, and the S&P 500 market index:

Year Apple Stock Price JPMorgan Chase & Co Stock Price S&P 500 Market Index Value

2017 $149.04 $93.85 2,425.17

2016 $95.89 $59.60 2,102.94

2015 $124.50 $68.25 2,076.79

2014 $94.03 $57.05 1,960.96

2013 $60.93 $56.49 1,606.28

2012 $55.78 $37.12 1,325.66

Part 1: Risk and Beta

A) Calculate the return each year for Apple, JPMorgan Chase & Co, and the S&P 500 market index using the following equation:

Value t – Value t-1

Return = ————————————-

Value t-1

In addition, use the Excel function to find the average for each corporation. (8 Points)

B) Calculate the standard deviation of returns for Apple, JPMorgan Chase & Co, and the S&P 500 market index using the Excel function. (8 Points)

C) Make a scatter plot of stock returns (y-axis) against market returns (x-axis) for both Apple and JPMorgan Chase & Co stock in one plot. Add a linear trendline to the scatter plot for each stock and include the equation on the chart. Identify the slope for each stock from the trendline equation. Label the y-axis, x-axis, legend, and chart title. (8 Points)

D) For each stock, use the Excel function to calculate the correlation between the stock returns and market returns. Furthermore, copy the standard deviations (from part B) and calculate the beta for each stock. (8 Points)

Standard Deviation stock

Beta = ———————————————- ( Correlation between stock and market )

Standard Deviation market

Part 2: Required Return

E) Assume a market risk premium of 5.40% and a risk free-free rate of 1.31%. Calculate the expected return on the market. Also calculate the required return for Apple and JPMorgan Chase & Co according to the CAPM. (8 Points)

F) If you formed a portfolio that consisted of 50% Apple stock and 50% JPMorgan Chase & Co stock, what would be its beta and its required return? (8 Points)

G) Suppose an investor wants to include Apple stock in their portfolio. Stocks A, B, and C are currently in the portfolio, and their betas are 0.68, 0.98, and 1.43, respectively. Calculate the new portfolio’s beta and required return if it consists of 25% of Apple, 15% of Stock A, 40% of Stock B, and 20% of Stock C. (8 Points)







Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10