Mini Case.
a-b) The holding period returns for the S&P 500, Wal-Mart and Target over the time period to June 2009 are as follows:
S&P 500
Wal Mart
Target
Holding Period Return
-37.06%
5.09%
-36.95%
Avg Monthly Return
-1.17%
0.36%
-1.35%
Standard Deviation
.06
.05
.11
c)
d) There was a significant difference between the returns of Wal Mart at the returns of the S&P500, whereas there was a much closer relationship between Target and the S&P. During this period, both Walmart and the S&P showed about the same amount of volatility but they often moved in different directions. In comparison, Target often moved in the same direction as the S&P, but it had quite a bit more volatility.
e)
Allocation
Return
Walmart
0.5
0.025475
Target
0.5
-0.18477
Total Return
-15.93%
f) The two-stock portfolio versus the S&P is as follows:
This graph shows the portfolio performing much closer to the S&P it is still a little bit more volatile, but the returns are much closer, as Wal-Mart's stability helps to counter the high level of volatility that Target has.
g)
0.31%
Holding Period Return
0.00
std dev
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