Provide a quick rundown of Daniel’s situation. Discuss the strategies and goals of how can he “add value”. Think about issues such as efficiency, risk-return, and how to add value. Include a recommendation of a portfolio make-up (weights, or even suggestions of other stocks). this is the assignment and I need answers for only questions 2 and 3 in the case attached.
- If the portfolio was equally weighted (20% in all stocks and ETF) what is the resulting portfolio position (risk and return)? How does the variability of each stock affect the portfolio? How does this relate to your answer in question 1 above? How would the portfolio risk and return change if 50% of it is in SBUX, 20% in SPY, and 10% in each of the remaining securities?
- Compute the “beta” for each stock. What does the beta measure? (Use SPY as the measurement of the Market). How does this relate to your previous answers? What is the portfolio beta (for the equally weighted)? What does it indicate?
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