Provide once again the data that you presented in answering part 2 of professional assignment 2. Calculate the mean, variance, and the standard deviation of each security’s annual rate of return. Calculate the correlation coefficient between every possible pair of securities’ annual rates of return.

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CLA 2 Comprehensive Learning Assessment 2 – CLO 1, CLO 3, CLO 4, CLO 5, CLO 6, CLO 7

 

This is a complete written report  of your portfolio formation in a Word file. Your historical data and relevant derived values in tables can be pasted from your previous calculations in the Excel file. Please provide explanations of all calculations and the justifications in the Word format. Also, make sure to paste all underlying  Excel formulae that you used for calculations in the Word file.

  1. Provide once again the data that you presented in answering part 2 of professional assignment 2.
  2. Calculate the mean, variance, and the standard deviation of each security’s annual rate of return.
  3. Calculate the correlation coefficient between every possible pair of securities’ annual rates of return.
  4. Choose percentages of your initial investment that you want to allocate amongst the five (5) securities (weights in the portfolio). Create embedded formulae which generate statistical properties of the portfolio upon insertion of the weights. Observe the mean, the standard deviation, and the CV of the annual rate of return of the portfolio.
  5. Find the combination of the weights that minimizes CV of the portfolio. How the CV of the optimal portfolio compares with the CV’s of its constituents. What is the expected rate of return and standard deviation of the rate of return of the portfolio?
  6. Choose different values within the range of the standard deviation of the portfolio, and for each chosen value locate the corresponding point on the efficient frontier by finding the weights that maximize the expected rate of return of the portfolio. Subsequently, construct the efficient frontier of your portfolio.
  7. Assume that you initially invested $1,000,000 in the portfolio and that the distribution of the annual rate of return of the portfolio is normal. What is the distribution of the return of the portfolio 20 years after its formation? Provide the graph of the distribution of the return of portfolio.

 

Provide your explanations and definitions in detail and be precise. Comment on your findings. Provide references for content when necessary. Provide your work in detail and explain in your own words. Support your statements with six (6) peer-reviewed in-text citation(s) and reference(s).

 

*Please refer to the Grading Criteria for Comprehensive Learning Assessments (CLAs) in the University Policies for specific guidelines and expectations.

 

CLA 2 Comprehensive Learning Assessment (CLA 2) Presentation

 

In addition to your CLA 2 report, please prepare a professional PowerPoint presentation summarizing your findings for CLA 2. The presentation will consist of your major findings, analysis, and recommendations in a concise presentation of 15 slides (minimum). You should use content from your CLA 2 report as material for your PowerPoint presentation. In addition, you should include learning outcomes from all your major assignments. This would include PA 1, CLA 1, PA 2, and of course, CLA 2 (unless otherwise specified by your Professor). An agenda, executive summary, and references slides should also be included. Please keep in mind that the university is moving towards a more digital footprint for our students. This means that your final CLA 2 presentation may be recorded, so that you may include it in your “e-portfolio” (graduating students should have all of their CLA 2 presentations on a flash-drive, in addition to student biography, resume, interests, and so forth). Students will present their PowerPoint during the last week of class in either the On-Campus Class Session or the online Virtual Class Session, as determined by the professor. Presentations should not exceed 15 minutes.