Finance assignment – risk and return

Assignment 2:  Risk and Return.  Complete and submit on due date.

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Complete the following risk and return exercise.


The purpose of this exercise is to first provide experience in locating, understanding, and analyzing basic stock price data. In addition, the ultimate learning objective is to translate this data into standard measures of risk and return, and to learn how to find the Beta for a security.



1.         Retrieve monthly price data for Apple, CVS and the S&P 500 (^GSPC) from Yahoo Finance for 2011 and for 2012.  Type in the ticker, then, click historical prices.  You will need end of month prices.

2.         Compute monthly Holding Period Returns (HPRs).

3.         Calculate arithmetic means.

4.         Calculate the standard deviation of the monthly HPRs.

5.         Repeat steps 1-4 for 1 of the stocks you individually selected for your group portfolio. (Stock to be analyzed VIACOM Inc. (VIA))

6.         Perform a linear regression for Apple, CVS, and for 1 of the stock’s you individually selected for your group portfolio.  Identify and briefly discuss all the Betas.  In your discussion, compare the Betas to those found on Bloomberg and Yahoo Finance.





If you download the data from Yahoo, you will notice that the dates in your spreadsheet don’t look like end of month dates. The prices are indeed the end of month prices.  Put the closing prices into the Excel template provided. Now, you’re ready to generate additional rows and columns to complete the calculations.