Deep Water Financial of Duluth, Minnesota, has asked you to evaluate the stock price growth for a portfolio containing the following firms: General Motors, International Business Machines, Potlatch, Inc., Sea Containers, Ltd., and Tata Communications. Compute the means, variances, and covariance’s for the stocks. Using the data file Stock Price File, compute the mean and variance for a portfolio that represents the five stocks equally. Second, modify the portfolio by removing Potlatch and Sea Containers and including in the portfolio 40% General Motors, 30% International Business Machines, and 30% Tata Communications. Determine the mean and variance for the second portfolio and compare it with the first. ---- Please show how you calculated it in Excel, thank you! Year 3M Company AB Volvo (ADR) Alcoa Inc. General Motors Corporation Intel Corporation International Business Machine Pearson PLC (ADR) Pentair, Inc. Potlatch Corporation Reliant Energy, Inc. SAFECO Corporation Safeway Inc. Sea Containers Ltd. Senior Housing Properties Trus TCF Financial Corporation TeleCommunication Systems, Inc 2001 84.32 16.5 36.55 24.89 26.66 108.1 14.49 34.81 44.44 26.24 55.68 34.21 0.08 22.68 17.93 3.56 2002 77.93 13.75 30.01 30.72 20.25 97.15 15.1 31.4 43.82 14.21 62.55 34.56 0.7 24.48 27.42 3.1 2003 77.5 9.42 29.57 19.42 24.96 82.2 11.87 34.52 50.98 10.32 56.5 23.66 12.54 16.91 27.14 2.2 2004 82.07 7.92 31.42 40.06 23.39 98.58 12.16 43.56 50.58 13.65 52.24 19.74 19.69 18.94 32.14 3.34 2005 85.03 6.12 38 53.4 32.05 92.68 11.21 22.85 34.77 7.36 38.93 21.91 18.25 17.23 25.68 4.94 2006 61.65 3.31 22.78 36.86 15.57 77.5 9.35 17.28 23.88 3.2 34.67 23.36 8.93 10.61 21.85 2.01 2007 59.11 3.28 35.55 48.6 31.45 120.96 12.28 18.26 29.32 16.51 31.15 41.75 13.68 13.91 23.99 5.45

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Deep Water Financial of Duluth, Minnesota, has asked you to evaluate the stock price growth for a portfolio containing the following firms: General Motors, International Business Machines, Potlatch, Inc., Sea Containers, Ltd., and Tata Communications. Compute the means, variances, and covariance’s for the stocks.
Using the data file Stock Price File, compute the mean and variance for a portfolio that represents the five stocks equally. Second, modify the portfolio by removing Potlatch and Sea Containers and including in the portfolio 40% General Motors, 30% International Business Machines, and 30% Tata Communications. Determine the mean and variance for the second portfolio and compare it with the first.

----
Please show how you calculated it in Excel, thank you!

Year	3M Company	AB Volvo (ADR)	Alcoa Inc.	General Motors Corporation	Intel Corporation	International Business Machine	Pearson PLC (ADR)	Pentair, Inc.	Potlatch Corporation	Reliant Energy, Inc.	SAFECO Corporation	Safeway Inc.	Sea Containers Ltd.	Senior Housing Properties Trus	TCF Financial Corporation	TeleCommunication Systems, Inc
2001	84.32	16.5	36.55	24.89	26.66	108.1	14.49	34.81	44.44	26.24	55.68	34.21	0.08	22.68	17.93	3.56
2002	77.93	13.75	30.01	30.72	20.25	97.15	15.1	31.4	43.82	14.21	62.55	34.56	0.7	24.48	27.42	3.1
2003	77.5	9.42	29.57	19.42	24.96	82.2	11.87	34.52	50.98	10.32	56.5	23.66	12.54	16.91	27.14	2.2
2004	82.07	7.92	31.42	40.06	23.39	98.58	12.16	43.56	50.58	13.65	52.24	19.74	19.69	18.94	32.14	3.34
2005	85.03	6.12	38	53.4	32.05	92.68	11.21	22.85	34.77	7.36	38.93	21.91	18.25	17.23	25.68	4.94
2006	61.65	3.31	22.78	36.86	15.57	77.5	9.35	17.28	23.88	3.2	34.67	23.36	8.93	10.61	21.85	2.01
2007	59.11	3.28	35.55	48.6	31.45	120.96	12.28	18.26	29.32	16.51	31.15	41.75	13.68	13.91	23.99	5.45

Definition Definition Measure of how two random variables change together. Covariance indicates the joint variability or the directional relationship between two variables. When two variables change in the same direction (i.e., if they either increase or decrease together), they have a positive covariance. When the change is in opposite directions (i.e., if one increases and the other decreases), the two variables have a a negative covariance.

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