File Preview FNCE 3484-HW1 Be sure to include all of your names + Group # on the first page of your submission! Facebook, Inc. (FB) NasdaqGS - NasdaqGS Real Time Price. Currency in US 181.76 +0.46 (+0.25%) At close: August 28 4:00PM EDT ^^snapshots from Wednesday, August 28, 2019 Alphabet Inc. (GOOG) NasdaqGS-Nasdaq GS Real Time Price. Currency in USD 1,171.02 +3.18 (+0.27%) At close: August 28 4:00PM EDT Provide the following analyses pertaining to a portfolio comprised of common stock issued by Facebook, Inc. (ticker: “FB") and common stock issued by Alphabet Inc. (ticker: "GOOG") (for some of the problems, you will need additional data provided on finance.yahoo.com-in the "Quote Lookup" box, type in "FB" or "GOOG"). Be sure to state assumptions upfront, and to print out, highlight, and hand in all relevant information that you use to calculate your answers so that it's clear where your numbers are coming from. 1) Portfolio Beta Suppose you plan to invest $1 million in FB and GOOG ($500,000 in each). Begin by estimating the beta of this portfolio using the five-year time series of monthly stock returns from August 2014 to August 2019 (inclusive). Use the S&P500 Composite Index as your proxy for the "market" (in the "Get Quotes" box type "^GSPC"), and for simplicity, you can assume a constant riskless rate (say, rf = = 2%). You'll need to start with the price data provided under the "Historical Data" tab, and calculate monthly stock returns using the monthly adjusted closing prices.i Hint: Recall a stock's beta is calculated as: the covariance between its excess returns and excess market returns, divided by the variance of excess market returns-i.e., Bi-Cov(rm,ri)/var(rm). ('excess return' refers to the return in excess of the riskless rate).
File Preview FNCE 3484-HW1 Be sure to include all of your names + Group # on the first page of your submission! Facebook, Inc. (FB) NasdaqGS - NasdaqGS Real Time Price. Currency in US 181.76 +0.46 (+0.25%) At close: August 28 4:00PM EDT ^^snapshots from Wednesday, August 28, 2019 Alphabet Inc. (GOOG) NasdaqGS-Nasdaq GS Real Time Price. Currency in USD 1,171.02 +3.18 (+0.27%) At close: August 28 4:00PM EDT Provide the following analyses pertaining to a portfolio comprised of common stock issued by Facebook, Inc. (ticker: “FB") and common stock issued by Alphabet Inc. (ticker: "GOOG") (for some of the problems, you will need additional data provided on finance.yahoo.com-in the "Quote Lookup" box, type in "FB" or "GOOG"). Be sure to state assumptions upfront, and to print out, highlight, and hand in all relevant information that you use to calculate your answers so that it's clear where your numbers are coming from. 1) Portfolio Beta Suppose you plan to invest $1 million in FB and GOOG ($500,000 in each). Begin by estimating the beta of this portfolio using the five-year time series of monthly stock returns from August 2014 to August 2019 (inclusive). Use the S&P500 Composite Index as your proxy for the "market" (in the "Get Quotes" box type "^GSPC"), and for simplicity, you can assume a constant riskless rate (say, rf = = 2%). You'll need to start with the price data provided under the "Historical Data" tab, and calculate monthly stock returns using the monthly adjusted closing prices.i Hint: Recall a stock's beta is calculated as: the covariance between its excess returns and excess market returns, divided by the variance of excess market returns-i.e., Bi-Cov(rm,ri)/var(rm). ('excess return' refers to the return in excess of the riskless rate).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:File Preview
FNCE 3484-HW1
Be sure to include all of your names + Group # on the first page of your submission!
Facebook, Inc. (FB)
NasdaqGS - NasdaqGS Real Time Price. Currency in US
181.76 +0.46 (+0.25%)
At close: August 28 4:00PM EDT
^^snapshots from Wednesday, August 28, 2019
Alphabet Inc. (GOOG)
NasdaqGS-Nasdaq GS Real Time Price. Currency in USD
1,171.02 +3.18 (+0.27%)
At close: August 28 4:00PM EDT
Provide the following analyses pertaining to a portfolio comprised of common stock issued
by Facebook, Inc. (ticker: “FB") and common stock issued by Alphabet Inc. (ticker: "GOOG")
(for some of the problems, you will need additional data provided on finance.yahoo.com-in
the "Quote Lookup" box, type in "FB" or "GOOG"). Be sure to state assumptions upfront, and
to print out, highlight, and hand in all relevant information that you use to calculate your
answers so that it's clear where your numbers are coming from.
1) Portfolio Beta
Suppose you plan to invest $1 million in FB and GOOG ($500,000 in each).
Begin by estimating the beta of this portfolio using the five-year time series of monthly
stock returns from August 2014 to August 2019 (inclusive). Use the S&P500 Composite
Index as your proxy for the "market" (in the "Get Quotes" box type "^GSPC"), and for
simplicity, you can assume a constant riskless rate (say, rf = = 2%).
You'll need to start with the price data provided under the "Historical Data" tab, and
calculate monthly stock returns using the monthly adjusted closing prices.i
Hint: Recall a stock's beta is calculated as: the covariance between its excess returns
and excess market returns, divided by the variance of excess market returns-i.e.,
Bi-Cov(rm,ri)/var(rm). ('excess return' refers to the return in excess of the riskless rate).
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education