Mini Case.

a-b) The holding period returns for the S&P 500, Wal-Mart and Target over the time period to June 2009 are as follows:

S&P 500

Wal Mart

Target

Holding Period Return

-37.06%

5.09%

-36.95%

Avg Monthly Return

-1.17%

0.36%

-1.35%

Standard Deviation

.06

.05

.11

c)

d) There was a significant difference between the returns of Wal Mart at the returns of the S&P500, whereas there was a much closer relationship between Target and the S&P. During this period, both Walmart and the S&P showed about the same amount of volatility but they often moved in different directions. In comparison, Target often moved in the same direction as the S&P, but it had quite a bit more volatility.

e)

Allocation

Return

Walmart

0.5

0.025475

Target

0.5

-0.18477

Total Return

-15.93%

f) The two-stock portfolio versus the S&P is as follows:

This graph shows the portfolio performing much closer to the S&P it is still a little bit more volatile, but the returns are much closer, as Wal-Mart's stability helps to counter the high level of volatility that Target has.

g)

0.31%

Holding Period Return

0.00

std dev