Finance Portfolio Management

Running head: FINANCE PORTFOLIO MANAGEMENT
Finance Portfolio Management
Name of the Student:
Name of the University:
Authors Note:

FINANCE PORTFOLIO MANAGEMENT
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Table of Contents
Introduction:...............................................................................................................................2
Part 1:.........................................................................................................................................2
a. Calculating the discrete return, arithmetic return and geometric returns for the stock:.........2
b. Calculating the variance returns of each stock with covariance and correlation coefficients:
....................................................................................................................................................3
c. Comparing the results, while indicating about the events that took place during the period:3
Part 2:.........................................................................................................................................4
a. Computing the weekly rate of return and variance of an equally weighted portfolio:...........4
b. Examining and comparing the pattern of the returns of the portfolio with those of the
individual stocks and stock index, while comparing the variances:..........................................5
Part 3:.........................................................................................................................................5
a. Converting the yields to weekly numbers:.............................................................................5
b. Computing beta and Jensen’s Alpha for each stock:.............................................................6
c. Calculating total risk of the portfolio, while partitioning the risk on the basis of systematic
and unsystematic risk:................................................................................................................6
d. Commenting on the stock and portfolio performance:..........................................................7
Part 4: Indicating how useful was the analysis, while detecting the limitations of the analysis7
Conclusion:................................................................................................................................8
References and Bibliography:....................................................................................................9

FINANCE PORTFOLIO MANAGEMENT
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Introduction:
The report provides information about the different levels of investment strategies that
can be used by investors while detecting a reliable investment options. The stocks of Apple
Inc. Walmart, McDonald’s and index NYSE Composite has been used for conducting the
relevant investment strategies. Therefore, with the help of adequate investment strategy
relevant investment option can be selected.
Part 1:
a. Calculating the discrete return, arithmetic return and geometric returns for the
stock:
Date Discreet return
Apple
Inc Walmart McDonald's
NYSE COMPOSITE
19-11-2018 -5.35% -7.46% 0.89% -2.94%
26-11-2018 -10.98% -2.65% -3.02% 3.50%
03-12-2018 3.65% 2.68% 3.62% -4.14%
10-12-2018 -5.65% -4.57% -2.94% -1.56%
17-12-2018 -1.79% -1.44% 0.18% -6.11%
24-12-2018 -8.91% -5.14% -4.99% 2.30%
31-12-2018 3.65% 5.74% 0.81% 2.15%
07-01-2019 -5.10% 1.42% 1.55% 2.73%
14-01-2019 2.72% 1.50% 2.29% 2.56%
21-01-2019 2.97% 3.05% 0.11% -0.20%
28-01-2019 0.60% -0.81% 0.78% 1.67%
04-02-2019 5.55% -3.18% -3.96% -0.30%
11-02-2019 2.34% 1.83% -1.11% 2.53%
18-02-2019 0.01% 4.61% 2.99% 0.72%
25-02-2019 1.50% -0.44% 1.78% 0.05%
04-03-2019 1.16% -1.63% 1.03% -2.25%
11-03-2019 -1.18% -0.35% -3.00% 2.42%
18-03-2019 7.64% 0.85% 3.25% -1.39%
25-03-2019 2.65% -0.14% 0.80% 1.26%
01-04-2019 -0.58% -0.76% 1.65% 1.82%
08-04-2019 3.71% 1.33% 0.43% 0.32%
15-04-2019 0.95% 2.76% 0.47% -0.36%
22-04-2019 2.51% 1.60% 1.73% 0.53%

FINANCE PORTFOLIO MANAGEMENT
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29-04-2019 0.22% -1.60% 1.29% 0.36%
06-05-2019 3.65% 0.54% 0.05% -1.92%
13-05-2019 -6.88% -0.17% 1.25% -1.02%
17-05-2019 -4.15% -1.03% -0.39% -0.32%
Particulars
Apple
Inc Walmart McDonald's
S&P
500
Arithmetic mean -0.1889% -0.1273% 0.2788% 0.0893%
Geometric mean -0.2910% -0.1685% 0.2558% 0.0641%
b. Calculating the variance returns of each stock with covariance and correlation
coefficients:
Particular
s Apple Inc Walmart McDonald's S&P 500
Variance 0.1992% 0.0818% 0.0456% 0.0498%
Covariance Apple Inc Walmart McDonald's S&P 500
Apple Inc 0.001991788 0.000697637 0.00042389 -0.000158076
Walmart 0.000697637 0.000817627 0.000325538 0.00011906
McDonald's 0.00042389 0.000325538 0.000455903 -0.000122228
S&P 500 -0.000158076 0.00011906 -0.000122228 0.000498367
Correlation coefficients Apple Inc Walmart McDonald's S&P 500
Apple Inc 1 0.546676659 0.444830894 -0.158660825
Walmart 0.546676659 1 0.533198173 0.186515761
McDonald's 0.444830894 0.533198173 1 -0.256423914
S&P 500
-
0.158660825
0.186515761 -0.256423914 1
c. Comparing the results, while indicating about the events that took place during the
period:
The calculations conducted above tables directly represent the arithmetic and
geometric returns of Apple Inc., Walmart, McDonald’s, and S&P 500. The calculations
directly indicated that the overall returns of McDonald’s are higher in comparison to other