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Question
Download monthly stock prices for Dollar General
(DG) and Starbucks (SBUX) between 1/1/2012 and 1/5/2013 using Yahoo Finance (not Google Finance). Use the ADJUSTED closing prices (not the closing prices) to perform the computations for this problem.

Hint: Assume that the data that you download is a sample.

a. Estimate the mean return of Dollar General.

b. Estimate the standard deviation of Dollar
General returns.

c. Estimate the mean return of Starbucks.

d. Estimate the standard deviation of Starbucks
returns .

e. Estimate the covariance between Dollar General
and Starbucks returns.

f. Estimate the correlation between Dollar General
and Starbucks returns.

g. What is the portfolio standard deviation over the
period for a portfolio that had proportion 0.8 of funds invested in Dollar General and proportion 0.2 of funds invested in Starbucks?

3. Download montly stock prices for Dollar General (DG) and Starbucks (SBUX) between 1/1/2012 and 1/5/2013 using Yahoo Finance (not Google Finance). Use the ADJUSTED closing prices (not the closing prices) to perform the computations for this problem. Hint: Assume that the data that you download is a sample. a. Estimate the mean return of Dollar General. b. Estimate the standard deviation of Dollar General returns. c. Estimate the mean return of Starbucks. d. Estimate the standard deviation of Starbucks returns e. Estimate the covariance between Dollar General and Starbucks returns. f. Estimate the correlation between Dollar General and Starbucks returns. g. What is the portfolio standard deviation over the period for a portolio that had proportion 0.8 of funds invested in Dollar General and proportion 0.2 of funds invested in Starbucks?
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Answer #1

DG SBX MEDG DEVIATIONS (DG) SQUARED DEVIATION MEAN(SBUX) DEVIATIONS SQUARED DEVIATIONS COVDG.SBUX) 21.516861.063476 21.51686 -0.790305 21.51686 2.507358 21.51686 3.143527 21.516862.0775024.31601456 21.516861.5437652.383210375 21.51686 1.933501 21.51686-0.0607940.00369591 21.516860.586097 21.51686 1.510442 1.130981203 0.624581993 6.28684414 4.848750793 2 101-01-2012 40.429428 20.453384 3 01-02-2012 39.907581 20.726555 401-03-2012 43.835716 24.024218 5 01-04-2012 45.031231 24.660387 6 01-05-2012 46.407028 23.594362 7 01-06-2012 51.606583 23.060625 8 01-07-2012 48 399555 19.583359 9 01-08-2012 48.45649 21.456066 10 01-09-2012 48.902428 22.102957 44.98877 44.98877 44.98877 44.98877 44.98877 44.98877 44.98877 20.78759947 25.81848165 1.1530541.329533527 0.001802937 2.011455755 4.559342 5.081189 2.891119171 0.1334773 2.946433832 10.21634809 6.594756208 0.21081657 2.293783213 1.726580208 2:677377859 6.481092622 -3.570718044 418258 6.617813 43.7954489 3.738426117 11.63345432 12.025082 15.31671894 1.143096 1.306668465 98877 1. İ. 3.410785 44.988773.913 0.343509693 2.281435035 1.191817624 11 01-10-2012 46 131866 20.006418 2.452476 988773.155083 21.51686 1.091704 12 01-11-2012 47441246 22.608564 13 01-12-2012 41.833687 23.571035 14 01-01-2013, 43.854691 24.665422 15 6.014638531 21 51686 20541754.219634931 2151686 3.148562 44.988773,1550839.954548737 9.913442668 3.562719711 1.887 COVARIANCE 1.1340791.286135178 MEAN OF SOUARED DEVIATIONS S.D 0.471398111 17 CORRELATION-COVARIANCE( X,Y/S.D (X)S D(Y 19 6.436557 0.073237619 21 23

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