Assignment Semester 1 2020
Due: 19th May 2020
You have recently inherited some money from a wealthy uncle. Part of the condition of the inheritance requires that you invest this money wisely so that you have money to live on in your old age. Luckily, you have been studying corporate finance and have acquired some skills to help with your investment. Your uncles 'Will' didn't stipulate how you should invest this money. However, as part of the requirements you must produce a report showing how you intend to invest the money before you have access to it.
A friend has suggested five stocks that you should consider investing in. He has downloaded for you the prices of these stocks for the last 2-3 years (this is in the data sheet).
Task:
(a) Conduct a brief analysis of the five companies (max 1500 words).
(b) Calculate the risk and return of all five companies as well as the market. In reporting your findings annualise the average return and standard deviation.
a. Indicate the best and worst performing stocks.
(c) Calculate covariance/correlation of the stocks.
(d) Calculate the expected return and standard deviation of an equally waited portfolio (investing 20% into each share)
(e) Your inheritance was $lmillion. How many shares would you invest in each of the 5 stocks (assuming the equally weighted portfolio - Price based on closing price on 30th April)
(f) If you have an opportunity to invest in a market portfolio, how well did you portfolio perform compared to the market portfolio?
(g) Using the closing price on 28th September, what is the value of your portfolio on this date?
Required:
Answer the above questions and present it back as a report.
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