Sub: Finance Topic: Portfolio managment
Calculation of expected rate of return and Beta
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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 (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?
What is the expected return of the portfolio?