1) Produce full risk-returns analysis for the 5 year period for Market 1, Market 2...
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Finance
1) Produce full risk-returns analysis for the 5 year period for Market 1, Market 2 and the Company (excluding CAPM analysis). Visualize your analysis in (1) and discuss the results.
2) Based on correlations matrix, which benchmark for the Market is better suited for application to this Company? Justify your answer
3) Using two methods (direct slope function and beta definition formula) calculate betas for the Company based on market 1 and market 2 benchmarks. Assume: risk-free rate is 2%. What is the Capital Market Line equation for the Company based on Market 1 and on Market 2?
4) Briefly, explain why the choice of a benchmark matters to our risk-return analysis?
Market 1
Market 2
Company
1-Jan-16
1,940.24
1035.38001
89.129997
1-Feb-16
1,932.23
1033.90002
85.150002
1-Mar-16
2,059.74
1114.03003
93.800003
1-Apr-16
2,065.30
1130.84998
94.220001
1-May-16
2,096.95
1154.79004
99.470001
1-Jun-16
2,098.86
1151.92004
95.790001
1-Jul-16
2,173.60
1219.93994
97.860001
1-Aug-16
2,170.95
1239.91003
102.309998
1-Sep-16
2,168.27
1251.65002
108.540001
1-Oct-16
2,126.15
1191.39002
107.510002
1-Nov-16
2,198.81
1322.33997
102.809998
1-Dec-16
2,238.83
1357.13001
102.949997
1-Jan-17
2,278.87
1361.81995
113.379997
1-Feb-17
2,363.64
1386.68005
118.339996
1-Mar-17
2,362.72
1385.92004
130.130005
1-Apr-17
2,384.20
1400.43005
133.740005
1-May-17
2,411.80
1370.20996
141.860001
1-Jun-17
2,423.41
1415.35999
141.440002
1-Jul-17
2,470.30
1425.14002
146.490005
1-Aug-17
2,471.65
1405.28003
155.160004
1-Sep-17
2,519.36
1490.85999
149.179993
1-Oct-17
2,575.26
1502.53003
175.160004
1-Nov-17
2,647.58
1544.14002
181.470001
1-Dec-17
2,673.61
1535.51001
175.240005
1-Jan-18
2,823.81
1574.97998
199.759995
1-Feb-18
2,713.83
1512.44995
209.130005
1-Mar-18
2,640.87
1529.43005
216.080002
1-Apr-18
2,648.05
1541.88001
221.600006
1-May-18
2,705.27
1633.60999
249.279999
1-Jun-18
2,718.37
1643.06995
243.809998
1-Jul-18
2,816.29
1670.80005
244.679993
1-Aug-18
2,901.52
1740.75
263.51001
1-Sep-18
2,913.98
1696.56995
269.950012
1-Oct-18
2,711.74
1511.41003
245.759995
1-Nov-18
2,760.17
1533.27002
250.889999
1-Dec-18
2,506.85
1348.56006
226.240005
1-Jan-19
2,704.10
1499.42004
247.820007
1-Feb-19
2,784.49
1575.55005
262.5
1-Mar-19
2,834.40
1539.73999
266.48999
1-Apr-19
2,945.83
1591.20996
289.25
1-May-19
2,752.06
1465.48999
270.899994
1-Jun-19
2,941.76
1566.56995
294.649994
1-Jul-19
2,980.38
1574.60999
298.859985
1-Aug-19
2,926.46
1494.83997
284.51001
1-Sep-19
2,976.74
1523.37
276.25
1-Oct-19
3,037.56
1562.44995
277.929993
1-Nov-19
3,140.98
1624.5
309.529999
1-Dec-19
3,230.78
1668.46997
329.809998
1-Jan-20
3,225.52
1614.06006
351.140015
1-Feb-20
2,954.22
1476.43005
345.119995
1-Mar-20
2,584.59
1153.09998
318.23999
1-Apr-20
2,912.43
1310.66003
353.640015
1-May-20
3,044.31
1394.04004
386.600006
1-Jun-20
3,100.29
1441.37
435.309998
1-Jul-20
3,271.12
1480.43005
444.320007
1-Aug-20
3,500.31
1561.88001
513.390015
1-Sep-20
3,363.00
1507.68994
490.429993
1-Oct-20
3,269.96
1538.47998
447.100006
1-Nov-20
3,621.63
1819.81995
478.470001
1-Dec-20
3,756.07
1974.85999
500.119995
1-Jan-21
3,714.24
2,012.95
503.352987
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