1.Estimate the average daily return of each fund using the arithmetic average method. (EXCEL) 2. Calculate the standard deviation of each fund (EXCEL) 3. Calculate the correlation between the two funds 4. Calculate the covariance between the two funds using a) Excel function, Covariance.S and b) using formula (Correlation multiplied by standard deviations of both funds.
1.Estimate the average daily return of each fund using the arithmetic average method. (EXCEL) 2. Calculate the standard deviation of each fund (EXCEL) 3. Calculate the correlation between the two funds 4. Calculate the covariance between the two funds using a) Excel function, Covariance.S and b) using formula (Correlation multiplied by standard deviations of both funds.
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
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this is a finance question. the arithmetic average is not going to be the total sum divided by n ( ex:2546/8) if you can't answer it, please just reject the question
Transcribed Image Text:Black Water CO(BWO)
TATA Steel (TATA)
1.Estimate the average daily return of each fund using the arithmetic average method. (EXCEL)
Below are the historical closing prices for the two funds above.
2. Calculate the standard deviation of each fund (EXCEL)
Date
BWO
TATA
3. Calculate the correlation between the two funds
10/20/2016 113.3374 113.6971
4. Calculate the covariance between the two funds using a) Excel function, Covariance.S
10/21/2016 113.7611 113.6408
and b) using formula (Correlation multiplied by standard deviations of both funds.
10/24/2016 115.1283 114.3635
10/25/2016 114.7624 113.5094
10/26/2016 113.9825
112.383
10/27/2016 113.4626 111.0971
10/28/2016 112.7501 110.7873
10/31/2016 112.6442 111.2285
11/1/2016 111.7969 109.8675
11/2/2016 110.9014 108.4689
11/3/2016 109.8134 107.9433
11/4/2016 109.4282 108.6379
11/7/2016 112.0279 111.2942
11/8/2016 112.7597 111.5852
11/9/2016 113.2797 115.0206
11/10/2016 111.4502 116.8603
11/11/2016 111.4984 119.5448
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