There’re 10 questions totally, I’ll give you all the questions later, the following is just 2 of them to be example.
- Describe what are the three types of efficiency and mention why are those important to understand modern finance?
- Explain all the recipe you have to use in order to be able to minimize risk given a predefined expected return?Using Excel, take the information from 3 stocks at your choice. Take this information monthly for 10 years.
(a) Compute the returns on every stock. In doing do, use the following formula_ri= pt,i −1 (1)pt−1,iWhere pt,i is the price of stock i at time t.
- (b) Compute the average return for every stock.
- (c) Compute the variance and the standard deviation for every stock.
- (d) Compute the covariance of all the stocks with each other.
- (e) Set a target expected return for your portfolio based on the averages you com- puted before and find the optimal weights in order to get that expected return by minimizing the risk.