As an assistant to Rachel, you are asked to collect the monthly prices of each s

Question

As an assistant to Rachel, you are asked to collect the monthly prices of each stock from Yahoo Finance from 11/23/2010 to 11/2/2015 (market booming time period), and then finish the following tasks: (Johnson and Johnson, IBM, Boeing) Please show the formula and/or work

1. Calculate monthly returns for each stock

2. 3. Calculate the variance and average return for each stock

4. Construct the covariance matrix of these stocks

5. Use Excel Solver function to build the efficient frontier (with and without short sale)

6. Determine the optimal risk portfolio

7. Draw a graph showing the efficient frontier and the CAL line (one graph for the case with short sale and one graph without short sale)

Boeing

IBM

Johnson and Johnson

Date Open Close 11/2/2015 148.380005 148.399994 10/1/2015 131.320007 148.070007 9/1/2015 128.160004 130.949997 8/3/2015 144.440002 130.679993 7/1/2015 140.479996 144.169998 6/1/2015 141.449997 138.720001 5/1/2015 144.410004 140.520004 4/1/2015 149.970001 143.339996 3/2/2015 150.850006 150.080002 2/2/2015 143.720001 150.850006 1/2/2015 131.070007 145.369995 12/1/2014 134.309998 129.979996 11/3/2014 125.349998 134.360001 10/1/2014 127.370003 124.910004 9/2/2014 125.620003 127.379997 8/1/2014 120.449997 126.800003 7/1/2014 127.660004 120.480003 6/2/2014 135.5 127.230003 5/1/2014 128.740005 135.25 4/1/2014 126.239998 129.020004 3/3/2014 127.18 125.489998 2/3/2014 124.239998 128.919998 1/2/2014 136.009995 125.260002 12/2/2013 134.990005 136.490005 11/1/2013 130.899994 134.25 10/1/2013 117.970001 130.5 9/3/2013 105.129997 117.5 8/1/2013 105.989998 103.919998 7/1/2013 102.93 105.099998 6/3/2013 99.360001 102.440002 5/1/2013 91.080002 99.019997 4/1/2013 85.599998 91.410004 3/1/2013 76.699997 85.849998 2/1/2013 74.489998 76.900002 1/2/2013 76.550003 73.870003 12/3/2012 74.410004 75.360001 11/1/2012 70.589996 74.279999 10/1/2012 69.860001 70.440002 9/4/2012 71.5 69.599998 8/1/2012 74.32 71.400002 7/2/2012 74.209999 73.910004 6/1/2012 68.669998 74.300003 5/1/2012 76.589996 69.610001 4/2/2012 74 76.800003 3/1/2012 74.959999 74.370003 2/1/2012 74.959999 74.949997 1/3/2012 74.699997 74.18 12/1/2011 68.699997 73.349998 11/1/2011 64.230003 68.690002 10/3/2011 60.099998 65.790001 9/1/2011 66.959999 60.509998 8/1/2011 71.610001 66.860001 7/1/2011 73.809998 70.470001 6/1/2011 77.949997 73.93 5/2/2011 80.349998 78.029999 4/1/2011 74.290001 79.779999 3/1/2011 71.93 73.93 2/1/2011 70 72.010002 1/3/2011 66.150002 69.480003 12/1/2010 64.660004 65.260002 11/23/2010 63.43 63.77

Explanation / Answer

PLEASE FIND THE SOLUTIO TO 1,2, 3, AND 6

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