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Statistical Analysis of Yahoo Finance Risk and Return Profiles Accounting Assignment Help
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Assignment Task
Question 1
Go to Yahoo Finance site and download (in Excel) data on two US companies of your choice. Use S&P 500 index as a benchmark.
(a) Provide statistical analysis of individual companies’ risk and return profiles, as well as the statistical relationship between the two companies. Briefly comment on your findings. In particular, focus on COVID-19 induced downturn.
(b) Discuss the robustness of your results in part (a) to the choice of (i) estimation window, (ii) interval of estimation and (iii) choice of a benchmark.
(c) Assume you have a portfolio equally invested in the two stocks. Compute this portfolio’s expected return and risk.
Question 2
- Suppose that your factory has a cash flow of $600,000 per year. Discount rate is 10%.
- You can abandon the factory immediately and get a salvage value of $7 million.
- Alternatively, you can delay this decision for two years and abandon the factory then (for the same salvage value). Standard deviation of cash flows is 20%.
- Which option is better? Justify your answer.
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