I’ve done all the workings. All I need is a report why I chose these 2 stocks. PRY and MQG. I’ll upload the excel file along with mean, variance, std deviation. You just need elaborate them that on question no 1.
You are going to invest in a portfolio which includes 2 stocks and a risk-free asset (Australian Market
only).
1. Use the top-down approach, select the two stocks of your choice (listed in ASX200) and
explain clearly the reasons for your selection (5 marks).
2. Collect the trading data (monthly) of the two stocks from Yahoo Finance website for the 3
year period from 3/2013 to 2/2016.
a. Calculate the monthly Average Return and Standard Deviation of the two stocks (2
marks).
b. Calculate the covariance and the coefficient of correlation between the two stocks (2
marks).
c. Calculate the weights to invest in the two stocks in the minimum variance portfolio (2
marks).
d. Draw the efficient frontier, showing the minimum variance portfolio. Explain how you do
it (2 marks).
e. Data on available Australian Government Bonds is provided in the attached excel file.
Choose one of them as the risk-free asset, explain the reason of your choice. How you
will combine this risk-free asset with your earlier portfolio (2 marks)?
f. Calculate the beta coefficients of the two stocks. Does your portfolio in part (d), and part
(e) perform better than the market (ASX200), explain your answer (2 marks)?

You only need to do question number one. PRY and MQG are the stocks.
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Posted on May 18, 2016Author TutorCategories Question, Questions