COURSE: FINANCE LEVEL 2Please, see attached filesThanks b) If you wish to build a portfolio based on these two stocks, determine the expectedreturn and standard deviation of the portfolio for the following combinations ofinvestment percentages in both stocks (WMSFT; WGM):b.1 50% invested in General Motors (GM) and 50% in Microsoft (MSFT).b.2 30% invested in General Motors (GM) and 70% in Microsoft (MSFT).b.3 63% invested in General Motors (GM) and 37% in Microsoft (MSFT).What can you conclude from your results?c) Apply the following formula to determine the minimum variance portfolio whenobtaining the percentage of investment in General Motors (GM) stock.Var (MSFT)-CoV (GM - MSFT)Var (GM)+Var (MSFT)-2COV(GM MSFT)Help: The percentage invested in MSFT is obtained by difference. (WMSFT = 1 - WGM).What can you conclude from your results when compared to those obtained in section b?WGM The following is market data as of the close of each year for the shares of General Motors (GM)and Microsoft (MSFT).DateDec 29, 1989Dec 31 1990Dec 31 1991Dec 31 1992Dec 31 1993Dec 30 1994Dec 29 1995Dec 31 1996Dec 31 1997Dec 31 1998Dec 31 1999Closing PriceUS$42.337.430.533.755.742.954.057.466.373.686.8GMMétricsAverage returnVariance of returnsStandar Deviation of returnsReturns CovarianceReturns CorrelationDividendUS$3.01.61.40.80.81.11.65.62.014.2According to the data shown, the following is requested:a) Complete following table:GMClosingPrice1.22.14.65.35.07.611.020.732.369.3116.8MSFTMSFTDividendUS$Help : If you notice, there are no scenario probabilities here. Therefore, conventional statisticalformulas should be used to use historical data to fill in the blanks.

A minimum variance portfolio is a portfolio of assets that has the lowest possible variance, or…

The following is market data as of the close of each year for the shares of General Motors (GM) and Microsoft (MSFT). Date Dec 29, 1989 Dec 31 1990 Dec 31 1991 Dec 31 1992 Dec 31 1993 Dec 30 1994 Dec 29 1995 Dec 31 1996 Dec 31 1997 Dec 31 1998 Dec 31 1999 Closing Price US$ 42.3 37.4 30.5 33.7 55.7 42.9 54.0 57.4 66.3 73.6 86.8 GM Métrics Average return Variance of returns Standar Deviation of returns Returns Covariance Returns Correlation Dividend US$ 3.0 1.6 1.4 0.8 0.8 1.1 1.6 5.6 2.0 14.2 According to the data shown, the following is requested: a) Complete following table: GM Closing Price 1.2 2.1 4.6 5.3 5.0 7.6 11.0 20.7 32.3 69.3 116.8 MSFT MSFT Dividend US$ Help: If you notice, there are no scenario probabilities here. Therefore, conventional statistical formulas should be used to use historical data to fill in the blanks.

The following is market data as of the close of each year for the shares of General Motors (GM) and Microsoft (MSFT). Date Dec 29, 1989 Dec 31 1990 Dec 31 1991 Dec 31 1992 Dec 31 1993 Dec 30 1994 Dec 29 1995 Dec 31 1996 Dec 31 1997 Dec 31 1998 Dec 31 1999 Closing Price US$ 42.3 37.4 30.5 33.7 55.7 42.9 54.0 57.4 66.3 73.6 86.8 GM Métrics Average return Variance of returns Standar Deviation of returns Returns Covariance Returns Correlation Dividend US$ 3.0 1.6 1.4 0.8 0.8 1.1 1.6 5.6 2.0 14.2 According to the data shown, the following is requested: a) Complete following table: GM Closing Price 1.2 2.1 4.6 5.3 5.0 7.6 11.0 20.7 32.3 69.3 116.8 MSFT MSFT Dividend US$ Help: If you notice, there are no scenario probabilities here. Therefore, conventional statistical formulas should be used to use historical data to fill in the blanks.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter13: Corporations: Organization, Stock Transactions, And Dividends

Section: Chapter Questions

Problem 8PEB

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