Here you will apply what you have learned about portfolio theory. Use the monthly-adjusted closing prices for IBM, MSFT, And the S&P500 during the five-year period from January 2013 – December 2017 in the file “Stock Project Stock Prices” posted on Canvas. Calculate returns for each month for each of these three assets (Stock 1; Stock 2; S&P 500).Exercise 1:Calculate the following for each asset (in Excel, using the statistical functions given in parentheses): average return (AVERAGE), standard deviation of returns (STDEV.S), and variance of returns (VAR.S). What is the covariance (COVAR.S) and correlation (CORREL) between the returns of stock 1 and stock 2?Exercise 2:Calculate the return and standard deviation of a portfolio that holds these two stocks in the following weights: 0%-100%; 10%-90%; 20%-80%; 30%-70%; 40%-60%; 50%-50%; 60%-40%; 70%-30%; 80%-20%; 90%-10%, 100%-0%. Plot these portfolio return / standard deviation combinations. Make sure return is on the vertical axis and standard deviation is on the horizontal axis. (Important: use a scatterplot) (You may use excel for this part)Exercise 31. Which specific combination would deliver the least amount of risk? Use the formula for the minimum variance portfolio (show your work by hand) to get the exact weights, calculate its return, standard deviation and Sharpe ratio (show your work by hand), and mark it by hand on your plot printout.2. Calculate the optimal risky portfolio’s weights (show your work by hand) in the two stocks. For this optimal portfolio, calculate the average return, standard deviation, and Sharpe ratio (show your work). Mark the ORP on the plot printout by hand. Draw in the CAL (by hand) that gives you the best risk-return combinations, given that the monthly risk free rate is 0.15%.3. Mark the spot on your return / standard deviation plot where the market index (i.e. S&P 500) falls.4. For a moment, assume the correlation between the two stocks equals exactly +1. Graph the investment opportunity set. (Hint: This does not require any additional excel work or calculations)5. Now assume the correlation between the two stocks equals exactly –1. Again, graph the investment opportunity set. If you would like, you can perform steps 4 and 5 on the same graph.

Part 1BackgroundEthical issues are a significant consideration for organizations in every industry. The finance sector, however, is highly regulated due to the breadth of its impact on aggregate economic behavior. Thus, the exposure of ethical breaches is more probable for firms in the finance sector due to being subjected to more audits, and the penalties are harsher than other industries because of the impact on the economy. Ethical issues can and likely will adversely impact a firm's financial performance.InstructionsStrong corporate governance is a vital element in mitigating the risk associated with ethical issues. As such, the shareholders at Capital Financial have tasked the organization withholding a Corporate Governance Summit Meeting for all employees.In preparation for the summit, you need to prepare a PowerPoint presentation to educate all employees about corporate governance. In order to accomplish this task, you realize that you need to research other organizations in the finance sector to see how corporate governance affects their operations, mission, and vision. You will then incorporate the insights you developed through your research into your presentation. The presentation should address the following:Define corporate governance.How can it be cultivated throughout the organization?How does it impact an organization's standards of ethics?Select an organization with strong corporate governance and describe the components that make their corporate governance strong.Select an organization with weak corporate governance and describe the components that make their corporate governance weak.Explain the difference between compliance and integrity.What are the elements of compliance?What are the elements of integrity?How does corporate governance influence both integrity and compliance?How can organizational integrity be improved?Why is an anonymous hotline preferred for reporting ethical misconduct, particularly when the reporting party is compelled by their integrity?Explain the employee's role in the firm's corporate governance.What are the benefits of the individual's contribution collectively to the firm's corporate governance at the desired level?What are the ramifications of any employee failing to contribute to the firm's corporate governance at the desired level?There is no length requirement specified for this assignment because the number of slides necessary to demonstrate your knowledge will be greatly influenced by the design approach you choose. Be sure to include APA citations for any resources you used and present the sources in APA format on a References slide at the end of the presentation.Part 2Many issues develop when financial services professionals are assisting multiple interests. This essentially gives them the incentive to employ certain actions, which derail the effectiveness of the financial market's functionality. If the functionality of the financial market is disrupted, it could adversely affect aggregate economic behavior.For your initial post, address the following:Why do financial services professionals assisting multiple interests create a conflict?Why does this information impact the integrity of the information in the financial markets?Why does this impact current or prospective entrepreneurs?Do you personally believe that it is ethical to enact financial transactions based on information that is excluded from other parties? Why or why not?Discuss at least two economic forces that are directly impacted by these factors.For your reply post, provide your thoughts and feedback in response to one classmate's initial post. Explain how your thoughts and ideas were similar or different. Be specific.Please make your initial post by midweek, and respond to at least one other student's post by the end of the week. Please check the Course Calendar for specific due dates.