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Date Closing Price for GOOG Monthly Return for GOOG Closing Price for NFLX Monthly Return for NFLX Closing Market Index value Monthly Market Return 2/1/2017 823.21   142.13   2278.87   3/1/2017 829.56   147.81   2363.64   4/1/2017 905.96   152.20   2362.72   5/1/2017 964.86   163.07   2384.20   6/1/2017 908.73   149.41   2411.80   7/1/2017 930.50   181.66   2423.41   8/1/2017 939.33   174.71   2470.30   9/1/2017 959.11   181.35   2471.65   10/1/2017 1016.64   196.43   2519.36   11/1/2017 1021.41   187.58   2575.26   12/1/2017 1046.40   191.96   2647.58   1/1/2018 1169.94   270.30   2673.61   2/1/2018 1104.73   291.38   2823.81   3/1/2018 1031.79   295.35   2713.83   4/1/2018 1017.33   312.46   2640.87   5/1/2018 1084.99   351.60   2648.05   6/1/2018 1115.65   391.43   2705.27   7/1/2018 1217.26   337.45   2718.37   8/1/2018 1218.19   367.68   2816.29   9/1/2018 1193.47   374.13   2901.52   10/1/2018 1076.77   301.78   2913.98   11/1/2018 1094.43   286.13   2711.74   12/1/2018 1035.61   267.66   2760.17   1/1/2019 1116.37   339.50   2506.85   2/1/2019 1119.92   358.10   2704.10   3/1/2019 1173.31   356.56   2784.49   4/1/2019 1188.48   370.54   2834.40   5/1/2019 1103.63   343.28   2945.83   6/1/2019 1080.91   367.32   2752.06   7/1/2019 1216.68   322.99   2941.76   8/1/2019 1188.10   293.75   2980.38   9/1/2019 1219.00   267.62   2926.46   10/1/2019 1260.11   287.41   2976.74   11/1/2019 1304.96   314.66   3037.56   12/1/2019 1337.02   323.57   3140.98   1/1/2020 1434.23   345.09   3230.78

Date Closing Price for GOOG Monthly Return for GOOG Closing Price for NFLX Monthly Return for NFLX Closing Market Index value Monthly Market Return 2/1/2017 823.21   142.13   2278.87   3/1/2017 829.56   147.81   2363.64   4/1/2017 905.96   152.20   2362.72   5/1/2017 964.86   163.07   2384.20   6/1/2017 908.73   149.41   2411.80   7/1/2017 930.50   181.66   2423.41   8/1/2017 939.33   174.71   2470.30   9/1/2017 959.11   181.35   2471.65   10/1/2017 1016.64   196.43   2519.36   11/1/2017 1021.41   187.58   2575.26   12/1/2017 1046.40   191.96   2647.58   1/1/2018 1169.94   270.30   2673.61   2/1/2018 1104.73   291.38   2823.81   3/1/2018 1031.79   295.35   2713.83   4/1/2018 1017.33   312.46   2640.87   5/1/2018 1084.99   351.60   2648.05   6/1/2018 1115.65   391.43   2705.27   7/1/2018 1217.26   337.45   2718.37   8/1/2018 1218.19   367.68   2816.29   9/1/2018 1193.47   374.13   2901.52   10/1/2018 1076.77   301.78   2913.98   11/1/2018 1094.43   286.13   2711.74   12/1/2018 1035.61   267.66   2760.17   1/1/2019 1116.37   339.50   2506.85   2/1/2019 1119.92   358.10   2704.10   3/1/2019 1173.31   356.56   2784.49   4/1/2019 1188.48   370.54   2834.40   5/1/2019 1103.63   343.28   2945.83   6/1/2019 1080.91   367.32   2752.06   7/1/2019 1216.68   322.99   2941.76   8/1/2019 1188.10   293.75   2980.38   9/1/2019 1219.00   267.62   2926.46   10/1/2019 1260.11   287.41   2976.74   11/1/2019 1304.96   314.66   3037.56   12/1/2019 1337.02   323.57   3140.98   1/1/2020 1434.23   345.09   3230.78

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 13QTD
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use sheet 3 to complete 4 & 5 questions

Date Closing Market Index value Closing Price for GOOG Closing Price for NFLX      
2/1/2017 2278.87 823.21 142.13   GOOG is Google
3/1/2017 2363.64 829.56 147.81   NFLX is Netflix
4/1/2017 2362.72 905.96 152.20      
5/1/2017 2384.20 964.86 163.07      
6/1/2017 2411.80 908.73 149.41      
7/1/2017 2423.41 930.50 181.66      
8/1/2017 2470.30 939.33 174.71      
9/1/2017 2471.65 959.11 181.35      
10/1/2017 2519.36 1016.64 196.43      
11/1/2017 2575.26 1021.41 187.58      
12/1/2017 2647.58 1046.40 191.96      
1/1/2018 2673.61 1169.94 270.30      
2/1/2018 2823.81 1104.73 291.38      
3/1/2018 2713.83 1031.79 295.35      
4/1/2018 2640.87 1017.33 312.46      
5/1/2018 2648.05 1084.99 351.60      
6/1/2018 2705.27 1115.65 391.43      
7/1/2018 2718.37 1217.26 337.45      
8/1/2018 2816.29 1218.19 367.68      
9/1/2018 2901.52 1193.47 374.13      
10/1/2018 2913.98 1076.77 301.78      
11/1/2018 2711.74 1094.43 286.13      
12/1/2018 2760.17 1035.61 267.66      
1/1/2019 2506.85 1116.37 339.50      
2/1/2019 2704.10 1119.92 358.10      
3/1/2019 2784.49 1173.31 356.56      
4/1/2019 2834.40 1188.48 370.54      
5/1/2019 2945.83 1103.63 343.28      
6/1/2019 2752.06 1080.91 367.32      
7/1/2019 2941.76 1216.68 322.99      
8/1/2019 2980.38 1188.10 293.75      
9/1/2019 2926.46 1219.00 267.62      
10/1/2019 2976.74 1260.11 287.41      
11/1/2019 3037.56 1304.96 314.66      
12/1/2019 3140.98 1337.02 323.57      
1/1/2020 3230.78 1434.23 345.09      

page 4

Date Closing Price for GOOG Monthly Return for GOOG Closing Price for NFLX Monthly Return for NFLX Closing Market Index value Monthly Market Return
2/1/2017 823.21   142.13   2278.87  
3/1/2017 829.56   147.81   2363.64  
4/1/2017 905.96   152.20   2362.72  
5/1/2017 964.86   163.07   2384.20  
6/1/2017 908.73   149.41   2411.80  
7/1/2017 930.50   181.66   2423.41  
8/1/2017 939.33   174.71   2470.30  
9/1/2017 959.11   181.35   2471.65  
10/1/2017 1016.64   196.43   2519.36  
11/1/2017 1021.41   187.58   2575.26  
12/1/2017 1046.40   191.96   2647.58  
1/1/2018 1169.94   270.30   2673.61  
2/1/2018 1104.73   291.38   2823.81  
3/1/2018 1031.79   295.35   2713.83  
4/1/2018 1017.33   312.46   2640.87  
5/1/2018 1084.99   351.60   2648.05  
6/1/2018 1115.65   391.43   2705.27  
7/1/2018 1217.26   337.45   2718.37  
8/1/2018 1218.19   367.68   2816.29  
9/1/2018 1193.47   374.13   2901.52  
10/1/2018 1076.77   301.78   2913.98  
11/1/2018 1094.43   286.13   2711.74  
12/1/2018 1035.61   267.66   2760.17  
1/1/2019 1116.37   339.50   2506.85  
2/1/2019 1119.92   358.10   2704.10  
3/1/2019 1173.31   356.56   2784.49  
4/1/2019 1188.48   370.54   2834.40  
5/1/2019 1103.63   343.28   2945.83  
6/1/2019 1080.91   367.32   2752.06  
7/1/2019 1216.68   322.99   2941.76  
8/1/2019 1188.10   293.75   2980.38  
9/1/2019 1219.00   267.62   2926.46  
10/1/2019 1260.11   287.41   2976.74  
11/1/2019 1304.96   314.66   3037.56  
12/1/2019 1337.02   323.57   3140.98  
1/1/2020 1434.23   345.09   3230.78  

 

Portfolio Weight on GOOG NFLX Return Portfolio Beta Standard Defensive/Aggressive 0.1 0.9 0.2 0.8 0.3 0.7 0.4 0.6 0.5 0.5 0.6 0.4 0.7 0.3 0.8 0.2 0.9 0.1 1
Transcribed Image Text:Portfolio Weight on GOOG NFLX Return Portfolio Beta Standard Defensive/Aggressive 0.1 0.9 0.2 0.8 0.3 0.7 0.4 0.6 0.5 0.5 0.6 0.4 0.7 0.3 0.8 0.2 0.9 0.1 1
Draw a Characteristic Line*** for GOOG Draw a Characteristic Line*** for NFLX Notes: * Excess return is the return that is earned over and above the risk free return ** Covariance measures the combined risk of holding two stocks at the same time. It is computed by using the Covariance function in Excel *** A characteristic line is the line of best fit which describes the scatter plot when a stock's excess return is measure on the X-Axis (Dependent variable) and the market's excess return is measured on the Y-Axis (Independent variable). You can refer to a quick demonstration here: https://www.youtube.com/watch?v=HX06ANAGWYQ **** For computing the standard deviation of the portfolio, the following formula should be used: w?o,² + w?o} + 2w, w,Cov %3D In the formula above, the left hand side of the equation signifies standard deviation of the portfolio. The greek letter sigma is the general significator of standard deviation. W, is the weight placed on the first stock in the portfolio. W, is the weight placed on the second stock in the portfolio. Cov12 is the covariance between the first and second stock
Transcribed Image Text:Draw a Characteristic Line*** for GOOG Draw a Characteristic Line*** for NFLX Notes: * Excess return is the return that is earned over and above the risk free return ** Covariance measures the combined risk of holding two stocks at the same time. It is computed by using the Covariance function in Excel *** A characteristic line is the line of best fit which describes the scatter plot when a stock's excess return is measure on the X-Axis (Dependent variable) and the market's excess return is measured on the Y-Axis (Independent variable). You can refer to a quick demonstration here: https://www.youtube.com/watch?v=HX06ANAGWYQ **** For computing the standard deviation of the portfolio, the following formula should be used: w?o,² + w?o} + 2w, w,Cov %3D In the formula above, the left hand side of the equation signifies standard deviation of the portfolio. The greek letter sigma is the general significator of standard deviation. W, is the weight placed on the first stock in the portfolio. W, is the weight placed on the second stock in the portfolio. Cov12 is the covariance between the first and second stock
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