Julia was recommended with four investment options in different asset classes. They are: 1. S&P 500 Index (SPX), which provides exposure to US equities. 2. iShares 20+ Year Treasury Bond ETF (TLT), which provides exposure to long duration bonds. 3. Gold, which provides exposure to Gold, the precious metal. (Use GC = F in your search) 4. Bitcoin, which provides exposure to the most popular cryptocurrency. (Use BTC - USD in your search) You are required to download the monthly adjusted closing price of these four investment options from Yahoo!Finance from 1 March 2019 to 29 February 2024. i. Explain why it is a good idea to spread your money across all four asset classes above. (3 marks) ii. Calculate the average monthly returns, annual returns and annual standard deviations of all four investment options for the above time period. (8 marks) ii. Using the 'CORREL' function, calculate the correlation coefficient between (SPX, TLT), (SPX, BTC - USD) and (SPX, GC = F). (3 marks) iii. Explain to Julia whether investing the traditional 60/40 (60% SPX equities and 40% TLT bonds) is better or worse than investing equally in all four asset classes from a risk return perspective. [1 marks) Note: Include the following tables in your report to support your explanations and recommendations. Table 3.1 - Return and SD of selected individual investments SPX TLT Gold BTC Monthly Return (%) Annual Return (%) Annual Standard Deviation (%) Table 3.2 Return and SD of portfolios (60% SPX; 40% TLT) (Equal portfolio) Portfolio Return (%) Portfolio SD (%) Coefficient of Variation

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter25: Portfolio Theory And Asset Pricing Models
Section: Chapter Questions
Problem 4P
Question
Julia was recommended with four investment options in different asset classes. They are: 1. S&P 500 Index (SPX), which provides
exposure to US equities. 2. iShares 20+ Year Treasury Bond ETF (TLT), which provides exposure to long duration bonds. 3. Gold,
which provides exposure to Gold, the precious metal. (Use GC = F in your search) 4. Bitcoin, which provides exposure to the most
popular cryptocurrency. (Use BTC - USD in your search) You are required to download the monthly adjusted closing price of these four
investment options from Yahoo!Finance from 1 March 2019 to 29 February 2024. i. Explain why it is a good idea to spread your money
across all four asset classes above. (3 marks) ii. Calculate the average monthly returns, annual returns and annual standard deviations
of all four investment options for the above time period. (8 marks) ii. Using the 'CORREL' function, calculate the correlation coefficient
between (SPX, TLT), (SPX, BTC - USD) and (SPX, GC = F). (3 marks) iii. Explain to Julia whether investing the traditional 60/40 (60% SPX
equities and 40% TLT bonds) is better or worse than investing equally in all four asset classes from a risk return perspective. [1 marks)
Note: Include the following tables in your report to support your explanations and recommendations. Table 3.1 - Return and SD of
selected individual investments SPX TLT Gold BTC Monthly Return (%) Annual Return (%) Annual Standard Deviation (%)
Table 3.2 Return and SD of portfolios (60% SPX; 40% TLT) (Equal portfolio) Portfolio Return (%) Portfolio SD (%) Coefficient of
Variation
Transcribed Image Text:Julia was recommended with four investment options in different asset classes. They are: 1. S&P 500 Index (SPX), which provides exposure to US equities. 2. iShares 20+ Year Treasury Bond ETF (TLT), which provides exposure to long duration bonds. 3. Gold, which provides exposure to Gold, the precious metal. (Use GC = F in your search) 4. Bitcoin, which provides exposure to the most popular cryptocurrency. (Use BTC - USD in your search) You are required to download the monthly adjusted closing price of these four investment options from Yahoo!Finance from 1 March 2019 to 29 February 2024. i. Explain why it is a good idea to spread your money across all four asset classes above. (3 marks) ii. Calculate the average monthly returns, annual returns and annual standard deviations of all four investment options for the above time period. (8 marks) ii. Using the 'CORREL' function, calculate the correlation coefficient between (SPX, TLT), (SPX, BTC - USD) and (SPX, GC = F). (3 marks) iii. Explain to Julia whether investing the traditional 60/40 (60% SPX equities and 40% TLT bonds) is better or worse than investing equally in all four asset classes from a risk return perspective. [1 marks) Note: Include the following tables in your report to support your explanations and recommendations. Table 3.1 - Return and SD of selected individual investments SPX TLT Gold BTC Monthly Return (%) Annual Return (%) Annual Standard Deviation (%) Table 3.2 Return and SD of portfolios (60% SPX; 40% TLT) (Equal portfolio) Portfolio Return (%) Portfolio SD (%) Coefficient of Variation
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage