## Portfolio Analysis

Data Collection:
Collect the monthly prices for TWO stocks and the S&P 500 index over the past 5 years. The stocks you pick have to be from different industries (do not pick Microsoft or Wal-Mart). The best place to get your historical price data is from Yahoo’s finance website. Use the monthly price data to calculate monthly rates of return for both your stocks and the S&P 500 index.
You will also need the risk-free rate for your data analysis. You can use the interest rate on 5-year Treasury-Bond as the risk-free rate. This can be obtained either from the Yahoo finance website or the WSJ website.
Part A: Create a Portfolio of two risky stocks.

1. Calculate the expected return (average return) and the standard deviation for both your stocks over the 5-year period.

2. Calculate the correlation coefficient between your two stocks.
3. Create a portfolio of your two stocks and calculate the standard deviation and expected return of your portfolio. (Your portfolio weights should depend on the market value of the two stocks)

Part B: Calculating Beta
1. What is a beta coefficient, and how are betas used in risk analysis?

2. Estimate the beta for both your stocks using 5 years of data.

1. In order to estimate beta you will have to do the following for each stock: a. Construct an XY scatter plot in excel that shows the stocks return on the Y-axis and the S&P 500 return (market return) on the X-axis.

b. Estimate each stocks beta by running regressions of the stock returns against the market returns. Are the betas consistent with your scatter plot? (Please show the scatter plot, regression line and the equation for each stock)
Part C: Security Market Line
1. Write out the equation of the Security Market Line (SML). Use the interest rate on 5-year Treasury bonds as the risk-free rate. Use the average returns on the S&P 500 index as the expected returns on the market.

2. Use the SML equation to calculate the required returns of both the stocks.

3. Graph the equation of the SML.
4. How do the expected rates of return compare with the required rates of return?

Show the expected rates of return and the required rates of return for each stock on the graph.

5. On the basis of the two stocks’ expected and required returns, which stock would be more attractive to a diversified investor?

6. Calculate the beta and required return of a portfolio that has \$75,000 invested in one of your stocks and \$50,000 invested in the other stock.

7. Suppose investors raised their inflation expectation by 2 percentage points over current estimates. What effect would higher inflation have on the SML and on the required returns of each stock? Explain and show graphically.

8. Suppose that investors’ risk aversion increased enough to cause the market risk
premium to increase by 2 percentage points (Inflation remains constant) What effect would this have on the SML and on required returns of each stock? Explain and show graphically.

Report: The report must be typed double-spaced. Please provide a cover page with the names of every one in your group, title for the project and the names of the company you picked. Your report should contain an introduction. In the introduction you can provide a brief snap shot of the company and the industry they were picked from. The introduction should also explain the project and provide a brief summary of the major conclusions. In the other sections you will present all the computations and address all the questions. Please present all the detailed calculations showing clearly all the steps through the final numbers. Your report has to include the following graphs:

9. Graph of the regression line used to calculate beta for each stock.

10. Graph of the Security Market Line.

A summary and references should be presented in the end. Cite all the sources of your data.

1. Which of the following would increase friction?

A. Soap
B. Sand
C. Water
D. Motor oil

2. In scientific notation, the number 39,940,000,000 becomes
A. 39.94 × 109
B. 3.994 × 1010
C. 3994 × 107
D. 3.994 × 10–10

3. If an object moves 40 m north, 40 m west, 40 m south, and 40 m east, what’s the total displacement?
A. 0 m
B. 160 m
C. 80 m
D. 40 m

4. Two objects are 5 kg and 10 kg respectively, and they’re 10 m apart. If the distance between them is increased to 20 m, what happens to the gravitational force?
A. It decreases.
B. It is doubled.
C. It doesn’t change.
D. It increases slightly.

5. Dave is riding on a straight path. After 5 s, his speed is 3.0 m/s. After 7 s, his speed is 5.0 m/s. After 10s, his speed is 7.0 m/s. What was his acceleration from 5 s to 10 s?
A. 2.0 m/s2
B. 0.8 m/s2
C. 1.0 m/s2
D. 0.67 m/s2

6. In a controlled experiment, the factor tested is called the
A. constant.
B. dependent variable.
C. control.
D. independent variable.

7. Light has what range of wavelength?
A. 400 nm to 10 nm
B. 10 nm to 0.01 nm
C. 0.3 nm to 0.001 nm
D. 700 nm to 400 nm

8. If an object is thrown 60 m into the air and it takes the object 6 s to get there, what’s the average speed

of the object?
A. 20 m/s
B. 10 m/s
C. 100 m/s
D. 360 m/s

9. Which of the following statements is true about data recording and evidence gathering?
A. Qualitative data uses words, while quantitative data uses numbers.
B. Qualitative data uses numbers, while quantitative data uses words.
C. Quantitative data is opinion based.
D. Qualitative data uses words and numbers.

10. Calculate the percent error if the experimental value of the density of copper is 21.2 g/cm3
and the accepted value is 22.1 g/cm3
A. 4.25%
B. 4.07%
C. 4.19%
D. 4.02%

11. Which of the following is not purely potential energy?
A. Gravitational energy
B. Nuclear energy
C. Thermal energy
D. Chemical energy

12. If one ball with a momentum of 50 kg•m/s hits a ball at rest and no other forces are acting on either
ball, what’s the total momentum of both balls after the collision?
A. 100 kg•m/s
B. 0 kg•m/s
C. 25 kg•m/s
D. 50 kg•m/s

13. If John travels 2,387 miles in 2 days, what’s his average speed per hour?
A. 49.7 mph
B. 1,193.5 mph
C. 73.7 mph
D. 99.5 mph

14. Which one of the following SI base units is not matched to the correct unit of measurement?
A. Length: km
B. Temperature: K
C. Time: s
D. Mass: kg

15. In the human eye, where is the actual image formed before being transmitted to the brain?

A. Cornea
B. Optic nerve
C. Pupil
D. Retina

16. Energy is _______ when it’s moved from one object to another.
A. conducted
B. transferred
C. lost
D. created

17. Which of the following is not part of testing a hypothesis?
A. Modeling
B. Reasoning
C. Collecting data
D. Gathering evidence

18. When viewing an object, we see its color according to the wavelength of light that the object
A. reflects.
B. transmits.
C. absorbs.
D. contains.

19. What’s the momentum of a 3.5-kg boulder rolling downhill at 5 m/s?
A. 14.3 kg•m/s
B. 17.5 km•m/s
C. 8.5 kg•m/s
D. 70 kg•m/s

20. What’s the speed of a sound wave through water at 25° Celsius?
A. 750 m/s
B. 1,000 m/s
C. 1,250 m/s
D. 1,500 m/s

Question 1 (TCO 7) What SQL clause is used to determine the fields to be displayed in an SQL Query statement? (Points : 2) SELECT ORDER BY FIELDS WHERE

Question 2.2. (TCO 7) What is the name for a column that uniquely identifies a record? (Points : 2) Primary key

Unique key Foreign key Table key

Question 3.3. (TCO 7) What task(s) are involved in designing a database table? (Points : 2) Naming each record Naming each field Naming each field and providing data types Inserting all the data

Question 4.4. (TCO 7) What SQL clause is used to determine the sequence in which the records are displayed in an SQL Query statement? (Points : 2) SEQUENCE ORDER BY SORT BY INDEX BY

Question 5.5. (TCO 7) The questions that cause the database software to extract the appropriate records from a table and specify the fields to be viewed are called _____. (Points : 2) reports keys queries indexes

Question 6.6. (TCO 7) Which of the following is not a database security issue? (Points : 2) Providing encryption Providing normalization Recovering lost data Providing data integrity

Question 7.7. (TCO 7) In an SQL Query statement, what Boolean operator can be used to test a set of conditions whereby any condition being true will and must test true? (Points : 2) OR AND XOR NOT

Question 8.8. (TCO 7) Which one of the following is a correct SELECT clause for selecting the fields: FirstName and LastName and Age? (Points : 2) SELECT FirstName and LastName and Age SELECT FIELDS(FirstName,LastName,Age SELECT FirstName,LastName,Age SELECT FROM FirstName,LastName,Age Question

9.9. (TCO 7) The WSH Object used in a VBScript program to retrieve data from a database is _____. (Points : 2) ADODB.Recordset ADODB.Open ADODB.Retrieve ADODB.Record

Question 10.10. (TCO 7) The general syntax of an SQL select statement is _____ (Points : 2)
Select—From—Where. Get—Date—Where. Select—Update—When. Select—Condition—Table.

## Assignment

Analyze Story Elements
Write an essay in which you analyze the role that setting and character play in driving the plot events in a fiction story from the readings. Poetry or nonfiction will not work for this assignment. The essay should contain an introduction, body, and conclusion, be 1-2 pages in length, typed, double spaced, using Times New Roman font, size 12. Please save your essay as a Word document and submit as an attachment to be graded.
Choose a story with elements that are clearly or strongly related. For example, you might choose a story with a plot in which the setting is crucial.
Briefly summarize the story, describing the setting(s) and the major characters.
Analyze the ways in which setting is essential to the plot of the story. For example, in an adventure story the plot events might hinge on severe weather conditions, high altitude, or heavy snowfall.
Analyze the ways in which the main characters are crucial to the arc of the story. For example, a reckless climber might take a risk that becomes an inciting event that drives the entire story’s action.
In your conclusion, summarize how the author’s choices in creating and developing characters and establishing setting impact the sequence of events in the story