PART A.
4. Comment on the difference between the volatility on the individual stocks and the equally weighted portfolio.
PART B.
2. At what level does Solver fail to find a solution? Why?
3.How do these portfolios compare to the mean and standard deviation for the equally weighted portfolio analyzed in Part A?
4. How does allowing short sales affect the frontier?
5. What do you notice about the relative weight (i.e., the portfolio weight divided by the sum of the portfolio weights of all stocks) of the different stocks in the portfolio as you change the target return? Can you identify the tangency portfolio?
PART C.
2.How can you interpret these alphas? How is the magnitude of alpha impacted by the usage of a price index (rather than a total/gross return index) as a proxy for the market return?
3.Report the correlation between the two variables and discuss the results in light of the CAPM theory and possible deviations from the CAPM due to investors’ tastes.
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