Q1 Import stock prices of NASDAQ Compsite Index, Microsoft and Walmart for the last 30 years.

## # A tibble: 22,677 x 8
## # Groups:   symbol [3]
##    symbol date        open  high   low close    volume adjusted
##    <chr>  <date>     <dbl> <dbl> <dbl> <dbl>     <dbl>    <dbl>
##  1 MSFT   1989-11-07 0.538 0.572 0.536 0.562 131542400    0.363
##  2 MSFT   1989-11-08 0.570 0.587 0.569 0.578 106486400    0.373
##  3 MSFT   1989-11-09 0.583 0.587 0.573 0.582 111526400    0.375
##  4 MSFT   1989-11-10 0.583 0.590 0.582 0.587  59168000    0.379
##  5 MSFT   1989-11-13 0.587 0.613 0.582 0.612 178905600    0.395
##  6 MSFT   1989-11-14 0.616 0.620 0.597 0.601  95241600    0.388
##  7 MSFT   1989-11-15 0.602 0.620 0.599 0.615  94492800    0.397
##  8 MSFT   1989-11-16 0.618 0.620 0.599 0.608  68054400    0.392
##  9 MSFT   1989-11-17 0.609 0.613 0.602 0.603  31651200    0.389
## 10 MSFT   1989-11-20 0.602 0.602 0.587 0.601  56937600    0.388
## # … with 22,667 more rows

Q2 Calculate yearly returns.

## # A tibble: 93 x 3
## # Groups:   symbol [3]
##    symbol date       yearly.returns
##    <chr>  <date>              <dbl>
##  1 MSFT   1989-12-29         0.0741
##  2 MSFT   1990-12-31         0.730 
##  3 MSFT   1991-12-31         1.22  
##  4 MSFT   1992-12-31         0.151 
##  5 MSFT   1993-12-31        -0.0556
##  6 MSFT   1994-12-30         0.516 
##  7 MSFT   1995-12-29         0.436 
##  8 MSFT   1996-12-31         0.883 
##  9 MSFT   1997-12-31         0.564 
## 10 MSFT   1998-12-31         1.15  
## # … with 83 more rows

Q3 Which of the three stocks has the highest expected yearly return?

Microsoft has the highest expected yearly return. Their expected yearly return is 28.37% where as ^IXIC has 13.37% and Walmart has and extepected return of 15.94%.

## # A tibble: 3 x 2
##   symbol returns_avg
##   <chr>        <dbl>
## 1 ^IXIC        0.134
## 2 MSFT         0.284
## 3 WMT          0.159

Q4 Calculate standard deviation of the yearly returns. Which of the three stocks is the riskiest in terms of standard deviation?

In the terms of standard deviation, Microsoft is the riskiest with a standard deviation of 40.85%. Compared to the other two of ^IXIC with 27.73% and WMT with 32.65%.

## # A tibble: 3 x 2
## # Groups:   symbol [3]
##   symbol  sd.1
##   <chr>  <dbl>
## 1 MSFT   0.408
## 2 ^IXIC  0.277
## 3 WMT    0.326

Q5 Is the standard deviation appropriate measure of risk for the three stocks? Calculate skewness and kurtosis, and make your argument using them.

Calculating standard deviation underestimates the risk. Positive skewness indicates a distribution with an asymmetric tail extending toward more positive values. A distribution with a positive kurtosis value indicates that the distribution has heavier tails than the normal distribution.

## # A tibble: 3 x 2
## # Groups:   symbol [3]
##   symbol skewness.1
##   <chr>       <dbl>
## 1 MSFT        0.228
## 2 ^IXIC       0.181
## 3 WMT         1.36
## # A tibble: 3 x 2
## # Groups:   symbol [3]
##   symbol kurtosis.1
##   <chr>       <dbl>
## 1 MSFT        0.249
## 2 ^IXIC       0.362
## 3 WMT         1.35

Q6 Calculate VaR, a downside risk measure, with a confidence interval of 0.99. Which of the three stocks has the greatest downside risk in terms of VaR?

Hint: This is not to be confused with HistoricalVaR you calculated in class. Look for the right code, using tq_performance_fun_options().

Microsoft has the greatest downside risk in terms of VaR. They have a VaR of -.599. This is the greatest loss out of the three stocks.

## # A tibble: 3 x 2
## # Groups:   symbol [3]
##   symbol    VaR
##   <chr>   <dbl>
## 1 MSFT   -0.599
## 2 ^IXIC  -0.484
## 3 WMT    -0.141

Q7 Calculate Sharpe ratios with an annualized risk-free rate of 2% and a confidence interval of 0.99. Which of the three stocks would you choose?

Hint: Make your argument based on the three calculated Sharpe Ratios.

I would choose microsoft because it has the greatest sharpe ratio out of the three.

## # A tibble: 3 x 4
## # Groups:   symbol [3]
##   symbol `ESSharpe(Rf=2%,p=99… `StdDevSharpe(Rf=2%,p=… `VaRSharpe(Rf=2%,p=…
##   <chr>                  <dbl>                   <dbl>                <dbl>
## 1 MSFT                   0.373                   0.646                0.440
## 2 ^IXIC                  0.196                   0.410                0.235
## 3 WMT                    0.139                   0.428                0.985

Q8 Hide the messages and the code, but display results of the code from the webpage.

Hint: Use message, echo and results in the chunk options. Refer to the RMarkdown Reference Guide.

Q9 Display the title and your name correctly at the top of the webpage.

Q10 Use the correct slug.