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Appendix 1.1: Table 1.1 - Weekly discrete rate of returns Week Date Apple Inc. (AAPL) McDonald's...
| Appendix 1.1: Table 1.1 - Weekly discrete rate of returns | |||||
| Week | Date | Apple Inc. (AAPL) | McDonald's Corporation (MCD) | Southwest Airlines Co. (LUV) | S&P 500 Index (GSPC) |
| 1 | 30-Oct-17 | ||||
| 2 | 6-Nov-17 | 1.2549% | -1.8187% | -1.1872% | -0.2141% |
| 3 | 13-Nov-17 | -2.2355% | 0.6847% | 2.2714% | -0.1336% |
| 4 | 20-Nov-17 | 2.8316% | 1.4330% | 0.7893% | 0.9140% |
| 5 | 27-Nov-17 | -2.2409% | 2.2269% | 8.6687% | 1.5293% |
| 6 | 4-Dec-17 | -0.9841% | 0.7554% | 5.6980% | 0.3512% |
| 7 | 11-Dec-17 | 2.7198% | 0.5289% | 2.3625% | 0.9168% |
| 8 | 18-Dec-17 | 0.5968% | -1.5205% | 1.9672% | 0.2814% |
| 9 | 25-Dec-17 | -3.3001% | 0.4109% | -0.7899% | -0.3626% |
| 10 | 1-Jan-18 | 3.4068% | 1.1225% | -1.7302% | 2.6010% |
| 11 | 8-Jan-18 | 1.1923% | -0.2775% | 1.6204% | 1.5708% |
| 12 | 15-Jan-18 | 0.7741% | 1.4668% | -0.4753% | 0.8635% |
| 13 | 22-Jan-18 | -3.8916% | 1.2742% | -6.5013% | 2.2265% |
| 14 | 29-Jan-18 | -6.4234% | -5.0327% | -3.4767% | -3.8547% |
| 15 | 5-Feb-18 | -2.5435% | -5.0677% | -5.4626% | -5.1620% |
| 16 | 12-Feb-18 | 10.6908% | -1.8712% | 5.0018% | 4.3011% |
| 17 | 19-Feb-18 | 1.7815% | 3.3355% | -0.4815% | 0.5519% |
| 18 | 26-Feb-18 | 0.4004% | -9.0662% | -0.3110% | -2.0402% |
| 19 | 5-Mar-18 | 2.1421% | 6.7192% | 3.2588% | 3.5418% |
| 20 | 12-Mar-18 | -1.0876% | 3.2562% | 2.2327% | -1.2402% |
| 21 | 19-Mar-18 | -7.3475% | -4.5455% | -6.8637% | -5.9502% |
| 22 | 26-Mar-18 | 1.7224% | 0.9033% | 0.9873% | 2.0326% |
| 23 | 2-Apr-18 | 0.3530% | 3.1142% | -3.4742% | -1.3783% |
| 24 | 9-Apr-18 | 3.7739% | 0.2977% | -0.3979% | 1.9900% |
| 25 | 16-Apr-18 | -5.1591% | -1.8302% | -0.5448% | 0.5210% |
| 26 | 23-Apr-18 | -2.0475% | -0.2960% | -2.2640% | -0.0086% |
| 27 | 30-Apr-18 | 13.2468% | 4.2514% | -1.4011% | -0.2431% |
| 28 | 7-May-18 | 2.5939% | 0.2181% | -0.6063% | 2.4142% |
Generate a covariance and correlation matrix of these stocks. Interprete your results.
Solutions
Expert Solution
Formula sheet
| A | B | C | D | E | F | G | H | I | J | K |
| 2 | ||||||||||
| 3 | Week | Date | Apple Inc. (AAPL) | McDonald's Corporation (MCD) | Southwest Airlines Co. (LUV) | S&P 500 Index (GSPC) | ||||
| 4 | 1 | 43038 | ||||||||
| 5 | 2 | 43045 | 0.012549 | -0.018187 | -0.011872 | -0.002141 | ||||
| 6 | 3 | 43052 | -0.022355 | 0.006847 | 0.022714 | -0.001336 | ||||
| 7 | 4 | 43059 | 0.028316 | 0.01433 | 0.007893 | 0.00914 | ||||
| 8 | 5 | 43066 | -0.022409 | 0.022269 | 0.086687 | 0.015293 | ||||
| 9 | 6 | 43073 | -0.009841 | 0.007554 | 0.05698 | 0.003512 | ||||
| 10 | 7 | 43080 | 0.027198 | 0.005289 | 0.023625 | 0.009168 | ||||
| 11 | 8 | 43087 | 0.005968 | -0.015205 | 0.019672 | 0.002814 | ||||
| 12 | 9 | 43094 | -0.033001 | 0.004109 | -0.007899 | -0.003626 | ||||
| 13 | 10 | 43101 | 0.034068 | 0.011225 | -0.017302 | 0.02601 | ||||
| 14 | 11 | 43108 | 0.011923 | -0.002775 | 0.016204 | 0.015708 | ||||
| 15 | 12 | 43115 | 0.007741 | 0.014668 | -0.004753 | 0.008635 | ||||
| 16 | 13 | 43122 | -0.038916 | 0.012742 | -0.065013 | 0.022265 | ||||
| 17 | 14 | 43129 | -0.064234 | -0.050327 | -0.034767 | -0.038547 | ||||
| 18 | 15 | 43136 | -0.025435 | -0.050677 | -0.054626 | -0.05162 | ||||
| 19 | 16 | 43143 | 0.106908 | -0.018712 | 0.050018 | 0.043011 | ||||
| 20 | 17 | 43150 | 0.017815 | 0.033355 | -0.004815 | 0.005519 | ||||
| 21 | 18 | 43157 | 0.004004 | -0.090662 | -0.00311 | -0.020402 | ||||
| 22 | 19 | 43164 | 0.021421 | 0.067192 | 0.032588 | 0.035418 | ||||
| 23 | 20 | 43171 | -0.010876 | 0.032562 | 0.022327 | -0.012402 | ||||
| 24 | 21 | 43178 | -0.073475 | -0.045455 | -0.068637 | -0.059502 | ||||
| 25 | 22 | 43185 | 0.017224 | 0.009033 | 0.009873 | 0.020326 | ||||
| 26 | 23 | 43192 | 0.00353 | 0.031142 | -0.034742 | -0.013783 | ||||
| 27 | 24 | 43199 | 0.037739 | 0.002977 | -0.003979 | 0.0199 | ||||
| 28 | 25 | 43206 | -0.051591 | -0.018302 | -0.005448 | 0.00521 | ||||
| 29 | 26 | 43213 | -0.020475 | -0.00296 | -0.02264 | -0.000086 | ||||
| 30 | 27 | 43220 | 0.132468 | 0.042514 | -0.014011 | -0.002431 | ||||
| 31 | 28 | 43227 | 0.025939 | 0.002181 | -0.006063 | 0.024142 | ||||
| 32 | ||||||||||
| 33 | Variance covariance matrix can be calculated using the co-variance formula in excel as follows: | |||||||||
| 34 | Variance covariance matrix: | |||||||||
| 35 | AAPL | MCD | LUV | GSPC | ||||||
| 36 | AAPL | =COVARIANCE.S($E$5:$E$31,E5:E31) | =COVARIANCE.S($E$5:$E$31,F5:F31) | =COVARIANCE.S($E$5:$E$31,G5:G31) | =COVARIANCE.S($E$5:$E$31,H5:H31) | =COVARIANCE.S($E$5:$E$31,H5:H31) | ||||
| 37 | MCD | =COVARIANCE.S($F$5:$F$31,E5:E31) | =COVARIANCE.S($F$5:$F$31,F5:F31) | =COVARIANCE.S($F$5:$F$31,G5:G31) | =COVARIANCE.S($F$5:$F$31,H5:H31) | |||||
| 38 | LUV | =COVARIANCE.S($G$5:$G$31,E5:E31) | =COVARIANCE.S($G$5:$G$31,F5:F31) | =COVARIANCE.S($G$5:$G$31,G5:G31) | =COVARIANCE.S($G$5:$G$31,H5:H31) | |||||
| 39 | GSPC | =COVARIANCE.S($H$5:$H$31,E5:E31) | =COVARIANCE.S($H$5:$H$31,F5:F31) | =COVARIANCE.S($H$5:$H$31,G5:G31) | =COVARIANCE.S($H$5:$H$31,H5:H31) | |||||
| 40 | ||||||||||
| 41 | Correlation matrix can be calculated using correlation matrix as follows: | |||||||||
| 42 | Correlation matrix: | |||||||||
| 43 | AAPL | MCD | LUV | GSPC | ||||||
| 44 | AAPL | =CORREL($E$5:$E$31,E5:E31) | =CORREL($E$5:$E$31,F5:F31) | =CORREL($E$5:$E$31,G5:G31) | =CORREL($E$5:$E$31,H5:H31) | =CORREL($E$5:$E$31,H5:H31) | ||||
| 45 | MCD | =CORREL($F$5:$F$31,E5:E31) | =CORREL($F$5:$F$31,F5:F31) | =CORREL($F$5:$F$31,G5:G31) | =CORREL($F$5:$F$31,H5:H31) | |||||
| 46 | LUV | =CORREL($G$5:$G$31,E5:E31) | =CORREL($G$5:$G$31,F5:F31) | =CORREL($G$5:$G$31,G5:G31) | =CORREL($G$5:$G$31,H5:H31) | |||||
| 47 | GSPC | =CORREL($H$5:$H$31,E5:E31) | =CORREL($H$5:$H$31,F5:F31) | =CORREL($H$5:$H$31,G5:G31) | =CORREL($H$5:$H$31,H5:H31) | |||||
| 48 | ||||||||||
| 49 | Variance of the stocks shows that AAPL has highest variance and hence most risky stock among the stocks. | |||||||||
| 50 | Also covariance of AAPL with the market i.e. GSPC is highest and for MCD it is lowest, | |||||||||
| 51 | which shows that APPL is most correlated with the market and MCD is least correlated with market. | |||||||||
| 52 | ||||||||||
jeff jeffy answered 2 years agoRelated Solutions
Appendix 1.1: Table 1.1 - Weekly discrete rate of returns Week Date Apple Inc. (AAPL) McDonald's...
Appendix 1.1:
Table 1.1 - Weekly discrete rate of returns
Week
Date
Apple Inc. (AAPL)
McDonald's Corporation (MCD)
Southwest Airlines Co. (LUV)
S&P 500 Index (GSPC)
1
30-Oct-17
2
6-Nov-17
1.2549%
-1.8187%
-1.1872%
-0.2141%
3
13-Nov-17
-2.2355%
0.6847%
2.2714%
-0.1336%
4
20-Nov-17
2.8316%
1.4330%
0.7893%
0.9140%
5
27-Nov-17
-2.2409%
2.2269%
8.6687%
1.5293%
6
4-Dec-17
-0.9841%
0.7554%
5.6980%
0.3512%
7
11-Dec-17
2.7198%
0.5289%
2.3625%
0.9168%
8
18-Dec-17
0.5968%
-1.5205%
1.9672%
0.2814%
9
25-Dec-17
-3.3001%
0.4109%
-0.7899%
-0.3626%
10
1-Jan-18
3.4068%
1.1225%...
Appendix 1.1: Table 1.1 - Weekly discrete rate of returns Week Date Apple Inc. (AAPL) McDonald's...
Appendix 1.1:
Table 1.1 - Weekly discrete rate of returns
Week
Date
Apple Inc. (AAPL)
McDonald's Corporation (MCD)
Southwest Airlines Co. (LUV)
S&P 500 Index (GSPC)
1
30-Oct-17
2
6-Nov-17
1.2549%
-1.8187%
-1.1872%
-0.2141%
3
13-Nov-17
-2.2355%
0.6847%
2.2714%
-0.1336%
4
20-Nov-17
2.8316%
1.4330%
0.7893%
0.9140%
5
27-Nov-17
-2.2409%
2.2269%
8.6687%
1.5293%
6
4-Dec-17
-0.9841%
0.7554%
5.6980%
0.3512%
7
11-Dec-17
2.7198%
0.5289%
2.3625%
0.9168%
8
18-Dec-17
0.5968%
-1.5205%
1.9672%
0.2814%
9
25-Dec-17
-3.3001%
0.4109%
-0.7899%
-0.3626%
10
1-Jan-18
3.4068%
1.1225%...
Appendix 1.1: Table 1.1 - Weekly discrete rate of returns Week Date Apple Inc. (AAPL) McDonald's...
Appendix 1.1:
Table 1.1 - Weekly discrete rate of returns
Week
Date
Apple Inc. (AAPL)
McDonald's Corporation (MCD)
Southwest Airlines Co. (LUV)
S&P 500 Index (GSPC)
1
30-Oct-17
2
6-Nov-17
1.2549%
-1.8187%
-1.1872%
-0.2141%
3
13-Nov-17
-2.2355%
0.6847%
2.2714%
-0.1336%
4
20-Nov-17
2.8316%
1.4330%
0.7893%
0.9140%
5
27-Nov-17
-2.2409%
2.2269%
8.6687%
1.5293%
6
4-Dec-17
-0.9841%
0.7554%
5.6980%
0.3512%
7
11-Dec-17
2.7198%
0.5289%
2.3625%
0.9168%
8
18-Dec-17
0.5968%
-1.5205%
1.9672%
0.2814%
9
25-Dec-17
-3.3001%
0.4109%
-0.7899%
-0.3626%
10
1-Jan-18
3.4068%
1.1225%...
Week Date Apple Inc. (AAPL) McDonald's Corporation (MCD) Southwest Airlines Co. (LUV) S&P 500 Index (GSPC)...
Week
Date
Apple Inc. (AAPL)
McDonald's Corporation (MCD)
Southwest Airlines Co. (LUV)
S&P 500 Index (GSPC)
1
30-Oct-17
2
6-Nov-17
1.2549%
-1.8187%
-1.1872%
-0.2141%
3
13-Nov-17
-2.2355%
0.6847%
2.2714%
-0.1336%
4
20-Nov-17
2.8316%
1.4330%
0.7893%
0.9140%
5
27-Nov-17
-2.2409%
2.2269%
8.6687%
1.5293%
6
4-Dec-17
-0.9841%
0.7554%
5.6980%
0.3512%
7
11-Dec-17
2.7198%
0.5289%
2.3625%
0.9168%
8
18-Dec-17
0.5968%
-1.5205%
1.9672%
0.2814%
9
25-Dec-17
-3.3001%
0.4109%
-0.7899%
-0.3626%
10
1-Jan-18
3.4068%
1.1225%
-1.7302%
2.6010%
11
8-Jan-18
1.1923%
-0.2775%
1.6204%
1.5708%
12
15-Jan-18...
Please answer the following questions for the Apple, Inc. (NASDAQ: AAPL) . Balance Sheet 1) Did...
Please answer the following questions for the Apple,
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1
2
3
4
5
P(x)
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0.20
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1
Date of Birth
2/15/1960
2
Date of Death
9/6/1988
3
Age at time of death
28.66
4
Worklife Expextancy as of 9/6/88
31
5
Life Expectancy as of 9/6/88
44.54
6
Marital Status
Married
7
Sex
Male
8
Race
White
9
Education
High School Graduate
10
Occupation
Window Washer
11
Expected Trial Date
12/1/1989
12
Earning at time of death
25,000
13
Benefits
28.00%
14
Expected...
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