AFIN2050: Effects of COVID-19 Pandemic On Assets - Report Writing - Accounting and Finance Assignment Help

Assignment Task:

Instructions: 

This assignment consists of a group analysis report submission and an individual analysis report submission. 

For the group report, students should form groups of 2 to 4 people to provide answers to the following questions. You may find the homework from Week 4 particularly helpful. (hint: Check Q8). This problem is designed to test your understanding of the benefits of diversification and ability to construct a simple efficient frontier from real-world data. Students may use excel and should include their data and calculations in a neat and easily readable way. The excel file does not contribute to the page limit, and is for the purpose of documenting how you have made your calculations. Please ensure you place all student numbers in the header of the document. 

Group Analysis Report - To be completed as a GROUP (Max 2 pages): 

1. Identify 3-4 stocks likely to benefit from the current Covid-19 pandemic.

2. Identify 3-4 stocks likely to be significantly adversely affected from the current Covid-19 pandemic. 

3. Download six months of daily historical price data for each of these firms from Yahoo Finance, as well as data for the ASX200 (code = ^AXJO). Using the ‘adjusted close’ price, calculate for each of your six firms the beta of the stock, as well as the standard deviation of returns. (5 marks)

4. Using an expected market return of 8% and a risk free rate of 1?lculate the expected return on your stocks given the calculated beta. Which stocks have the highest/lowest expected returns? What does this tell you about their level of expected risk? (10 marks)

5. Using these expected returns, and weights which vary from 0 to 100% in 5% increments, construct and graph an efficient frontier from the following sets of securities, identifying the risk and return of the minimum variance portfolio (lowest variance): (20 marks) 

a. Two stocks from the ‘benefit’ category

b. Two stocks from the ‘suffer’ category

c. One stock from each of the ‘benefit’ and ‘suffer’ category 

6. Which point across the three minimum variance portfolios generates the best risk/reward tradeoff? 

How about the lowest total variance? Why do you think this is the case?