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1. data analysis helps - excel worksheet ...
finance multi-part question and need the explanation and answer to help me learn.
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1 HW3 FIN 202 Winter 2023 Quick Tips The assignment is due Monday, Feb 20, 11:59 pm
Central Time Remember to show the calculation in the cells where calculations are
occurring. Decimals should go to 2 places. This assignment covers content from weeks 6 & 7
There are two sections to this assignment. Section 1 Use the HW3 Excel File to create a new
worksheet for each of the below parts Part 1: 1) In the excel file, the first worksheet of the
file should be named “Part 1”. 2) In cell A1 write out the formula to calculate the present
value. 3) In this exercise you will calculate the Present Value based on the following
parameters: a. X = $12,700 b. N = 6 years c. r = 7.75% 4) Using the same parameters as #3
above also show proof that the present value equals the future value. Part 2: 1) Create a new
worksheet in the file and name it “Part 2”. 2) Using the same parameters as in #3 above
create the following: a. Create a table with a column of discount rates from 2% to 25% in
increments of a half percent. For example, 2%, 2.5%, 3% and so on. b. In the table create a
column to calculate the present value at each discount rate. c. Create a line chart showing
the present value for each discount rate. Part 3: (See next page for the variables to use in the
edit screen of the Present Value function) 1) Create a new worksheet in the file and name it
“Part 3”. 2) Think about the exercises we did in class with investments, loans, and lottery.
For the following exercises create a box for each exercise as we did in class and put all the
information in the box. Use the present value function to calculate the present value. You
are always calculating the PV based on receiving the funds at the end of the period (where it
says type) 3) Here is the information for the following exercise regarding taking out a loan:
a. You take out a personal loan for 10 years. b. The interest rate = 8% c. You can afford to
make monthly payments of $760 for 10 years
2 d. Based on the present value, how large of a loan can you afford to borrow? 4) You just
won $100 million in the lottery. The Lottery can either pay you a lump sum right now or pay
you once a year for 25 years. a. Interest rate = 3% b. Lottery pays you $4 million once a year
for 25 years c. What is the present value of the lump sum? 5) You are saving for retirement.
You want your retirement fund to reach $5 million in 40 years. Based on the below
parameters, what is the present value of what you’ll need to invest today? a. The interest
rate is 5.5% b. You are making monthly payments of $800 for the entire period. In the
function insert search for PV, then go to PV. Inputs for present value are: Rate = the annual

2. interest rate. If there are monthly payments, the rate should be divided by 12. For example
5%/12. NPER = Total number of payment periods. NPER is multiplied by the number of
years for example 12 payments a year for 5 years = 12*5. PMT = Payment made each period.
If it is more than an initial payment, then PMT should be the amount you pay each period.
For example, $500 is paid each month. FV = Future value depends on if you are receiving
funds or paying out funds. For example in an investment, the future value is how much you
would receive in the future. For a loan payment schedule, it would be $0 because you are
paying down a loan. Type = Use 0 or leave empty to represent payment made at the end of a
period. If you enter 1, it represents a payment made at the beginning of a period. For this
class, we will leave it empty. Look at the Week 6 Exercise video for examples Part 4 (The
worksheet should be called Part 4) 1) Effective Rate Setup the effective rate format the
same as in the video and calculate the effective rate to include: Annual Semi-annual
Quarterly
3 Bimonthly Monthly Weekly Daily b) Use a nominal rate of 8.23%. Automate the nominal
rate by placing it in cell A1 and referencing the A1 cell in your Effective Rate function. c) Use
the effect function to calculate the effective rate d) Create a column to calculate the effective
rate with an equation to confirm the effective rate (calculate by hand) 2) Perpetual PV a)
Set uptup the perpetual rate format the same as in the video and calculate the perpetual
present value of $30,000 with a rate of 7%. b) Calculate the PV at 10 years, 20 years, 40
years, 100 years, 250 years, 500 years, 800 years, and 1000 years. You can use the PV
function to do this. Section 2 Open the HW3 Excel Sheet Part 1 1) Below the stock prices
in portfolio 1 and portfolio 2 add the following statistics: a) Mean return b) Standard
deviation c) Modified Sharpe ratio d) Skewness e) Sample Size f) The above stats should
have two decimal places and in percentage format except for the Sharpe ratio which should
have 4 decimal places and number format and skewness with 2 decimal places and number
format. 2) Create a correlation matrix of portfolio 1 in a new sheet and call it correlations a.
Remember to copy the ticker symbols into row 4 above the returns before creating a
correlation matrix. Use paste value. b. Go to the Data tab on top of Excel and to the far right
should be Data Analysis. Click that on and use correlation. The input range should be
G4:K172. Make sure “columns” is checked and click the box “Labels in First Row” and click
“New Worksheet” and name it “correlations”.
4 c. Also, create a correlation matrix of Portfolio 2 and copy the matrix into the correlations
sheet. d. The correlations should be two decimal places. e. Use conditional formatting to
highlight in yellow the correlations that are between -0.3 and 0.3. Make sure the blank
values in the matrix are not highlighted by going to conditional formatting, then to
“highlight cell rules” then to “more rules” and change “cell values” to the “blanks” setting
and then to “format” and in the fill ribbon click “no color”, then hit Ok and click Ok again. f.
Note the stocks that do not contribute well to the diversification of each portfolio (highly
correlated with 2 or more other stocks). In a couple of sentences next to each matrix, what
could you say about the correlations? 3) Create a copy of Portfolio 1. This is done by placing
the cursor over the tab name. Then right-click. Then click on where it says “Move or Copy”.
Then highlight portfolio 1 and click the “create a copy” box. Once you create the copy
rename the copy “Port1 Opt” 4) Create a copy of Portfolio 2. Call it “Port2 Opt” 5) In Port1

3. Opt and Port2 Opt optimize each portfolio using Solver. a. The set objective is to minimize
the portfolio standard deviation in column L. b. the constraints are all the weights sum to
100% AND each weight is at least 5% Part 2: 6) Create a new sheet and name it “Scatter” 7)
Go to insert and click on the first chart of the scatter charts a. On the chart right click and go
to select data b. Then click add and name the data series Port1. The X-axis should be the
standard deviation of Portfolio 1. Y-axis should be the mean return of Portfolio 1. Repeat
this process for Port1 Opt, Portfolio 2, and Port2 Opt. c. The chart should now have 4 data
points d. Add callout data labels to the data points e. Add a series name to each data point f.
If there is a legend, please delete it g. Below the chart create a table with the 4 data sets and
list their standard deviation and mean return 8) Optimize Port1 Opt and Port2 Opt. The set
objective is to maximize the portfolio’s skewness 9) Create a new scatter chart in the
scatter worksheet a. On the chart right click and go to select data b. Then click add and name
the data series Port1. The X-axis should be the standard deviation of Portfolio 1. Y-axis
should be skewness of Portfolio 1. Repeat this process for Port1 Opt, Portfolio 2, and Port2
Opt. c. The chart should now have 4 data points d. Add callout data labels to the data points
e. Add a series name to each data point f. If there is a legend, please delete it g. Add axis
titles to both charts h. Delete grid lines in both charts Finally – don’t just get an answer. Try
to UNDERSTAND what the answer is telling you.