price reflect total returns, not capital returns only. A

The 5 Australian listed companies in the ASX200 that have been chosen are AGL, Westpac, QBE, Boral Ltd and Qantas.The adjusted closing price is adjusted for dividends, stock splits and so on. This makes the adjusted closing price reflect total returns, not capital returns only. A good source of adjusted closing prices is Yahoo Finance. Ensure that each of the companies have at least 120 months of adjusted closing price data so that the GFC which started in 2007 is included. Do not mix US and Australian companies since we don’t want to complicate the assignment with foreign exchange considerations. If you chose Australian stocks, download the ASX200 accumulation index or if you chose US stocks, download the S&P500 accumulation index monthly closing prices provided on MQ ilearn. Each countries’ government bond yields are also provided. Match the accumulation index, government bond yields and stock data so that the dates correspond. There is a demonstration spreadsheet on MQ ilearn called ‘vlookupExample.xlsx’ which might help you start. The shares you selected will be referred to as the shares, the ASX200 or S&P500 as the market portfolio, and the Australian or US federal government bonds as the bond. All of them will be referred to as the assets, so there are 7 assets (5 stocks, the market portfolio and the bond). The time period that should be used from the historical data (the 5 files that have been attached), is: start date 3/2007 to 2/2017. Question 1a (Half page):Graph two Markowitz bullets on the same chart using the stocks only, and then all assets (stocks, market and bond). Do not assume that the bond is risk free. Label each portfolio possibility frontier (Markowitz bullet) appropriately. Depict the stocks, market portfolio and bond as points on the graph and label them too. Assume that all assets can be short-sold. Question 1b (Half page): Repeat with short selling not allowed.

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