Portfolio of Stocks
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Demonstrate to your colleagues how you would calculate the expected rate of return, also called r-hat, and Beta on a self-designed portfolio of four common stocks selected from the NASDAQ or NYSE stock exchanges. Assume the weighting of the portfolio to be 15%, 30%, 35%, 20%. No two portfolios presented by students can include the same companies. Explain how to calculate the standard deviation for each stock in your portfolio using the monthly close stock price (show your calculations using Excel if possible). What is the Beta Coefficient (this is given in Yahoo) of each stock and the Beta of your portfolio; what does beta mean to you and your selection of stocks compared to your colleagues? Your initial posting is due before Day 3. Save your portfolio as we will be using it for future class discussions.
Critique the calculations and analysis of at least one colleague. If the calculation was in error, explain how to correct that calculation and please show all of your work. Reflect on the analysis of your colleague and support or defend how standard deviation and beta assist in the selection of a portfolio of stocks. If you had to choose between your portfolio and your colleague's portfolio, which would you choose and why?
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