Please reference the attached document.
Stocks: TXN, T, AAPL, AMD, ENPH, ERIC, QRVO, TWTR, NIO, PANW, LUV, NVDA, TSLA, AMZN, CCIV, SHOP, MRNA Target Return: 15% Project 3 ※ Using the R script, answer the following questions. Please show all works for full credit. 1. Please use the following instructions. 1) Find 17 stocks you want to research. You can find ticker symbols from Google, Yahoo! Finance, MSN money, and so on (i.e. The ticker symbol of Apple Inc. is “AAPL”). 2) Run the following steps. i. Use the following libraries: library(quantmod) library(tseries) library(xts) ii. From Yahoo! Finance, download daily prices of stocks (from Jan. 1, 2012 to Dec. 31, 2018) you selected to research. i.e. Suppose that you want to download daily stock prices of Apple Inc. whose ticker symbol is “AAPL”. Then, run as follows: getSymbols("AAPL", src="yahoo", from='2012-01-01', to='2018-12-31') iii. Obtain monthly log stock returns for each stock. For example, if you downloaded daily stock prices of Apple, Inc. and Microsoft Corporation, then you will need to run the following: AAPL.rtn <- monthlyreturn(aapl$aapl.adjusted,="" subset="NULL," type='log' ,="" leading="TRUE)" msft.rtn=""><- monthlyreturn(msft$msft.adjusted,="" subset="NULL," type='log' ,="" leading="TRUE)" iv.="" prepare="" your="" data="" containing="" all="" monthly="" log="" stock="" returns="" of="" 17="" stocks,="" and="" assign="" the="" name="" 'myportfolio'="" (please="" refer="" to="" p.="" 11="" on="" ch="" 6="" course="" material="" to="" see="" how="" 'myportfolio'="" should="" look="" like.)="" 3)="" using="" 'myportfolio'="" containing="" monthly="" log="" stock="" returns="" of="" 17="" stocks,="" a)="" [5="" points]="" find="" the="" weights="" of="" mean-variance="" efficient="" portfolio="" (you="" can="" set="" your="" own="" target="" return.).="" b)="" [10="" points]="" find="" (plot)="" efficient="" frontier.="" ※="" the="" plot="" of="" efficient="" frontier="" should="" be="" legible="" (as="" fancy="" as="" possible).="" ※="" extra="" credit="" (5="" points:="" no="" partial="" credits)="" –="" by="" your="" own="" research="" suppose="" you="" want="" to="" invest="" in="" 17="" stocks="" you="" selected="" above.="" then,="" you="" obtained="" the="" weights="" of="" mean-variance="" efficient="" portfolio="" in="" 3)="" for="" your="" portfolio.="" if="" you="" construct="" your="" portfolio="" in="" 2019="" according="" to="" those="" weights,="" how="" your="" investment="" performance="" would="" be="" in="" 2019?="" 2.="" a="" bond="" price="" is="" the="" present="" value="" of="" all="" future="" cash="" flows="" (coupon="" interest="" every="" year="" and="" par="" value="" at="" time="" to="" maturity)="" as="" shown="" in="" ch="" 7="" course="" material.="" that="" is,="" where="" :="" par="" value="" of="" the="" bond="" _????:="" annual="" coupon="" rate="" :="" time="" to="" maturity="" :="" bond="" yield="" bond="" price="∑" =1="" ×="" _????="" (1="" +="" )?="" +="" (1="" +="" )?="" ,="" a="" function="" to="" calculate="" a="" bond="" price="" is="" presented="" on="" p.="" 5="" in="" ch="" 7="" course="" material.="" as="" you="" can="" see,="" the="" function="" exactly="" illustrates="" the="" equation="" above.="" 1)="" suppose="" you="" have="" to="" find="" coupon="" rate="" when="" you="" know="" all="" other="" variables,="" such="" as="" the="" bond="" price,="" par="" value,="" time="" to="" maturity,="" and="" yield.="" to="" find="" coupon="" rate="" instead="" of="" bond="" price,="" you="" can="" use="" the="" following="" formula="" (if="" you="" solve="" the="" equation="" above="" for="" c_rate,="" you="" can="" easily="" obtain="" this="" formula.).="" −="" (1="" +="" )?="" c_rate="?" ∑?="1" (1="" +="" )?="" therefore,="" if="" you="" invest="" in="" a="" bond="" that="" has="" $1,157.449="" of="" current="" bond="" price,="" $1,200="" of="" par="" value,="" 4="" years="" to="" maturity,="" and="" 5%="" of="" yield,="" you="" can="" calculate="" coupon="" rate="" as="" follows:="" #="" create="" time="" t="" t=""><- seq(1,="" 4,="" 1)="" #="" create="" present="" value="" factor="" pv_factor=""><- 1="" (1="" +="" 0.05)^t="" #="" current="" bond="" price="" bond_value=""><- 1157.449="" #="" par="" value="" c_rate=""><- (1157.449="" –="" 1200="" (1+0.05)^4)="" (1200*sum(pv_factor))="" c_rate="" [1]="" 0.0400001="" a)="" [8="" points]="" referring="" to="" the="" codes="" above,="" create="" your="" own="" function="" to="" calculate="" coupon="" rate.="" that="" is,="" you="" have="" to="" complete="" the="" body="" of="" the="" following="" function="" (bond_value:="" current="" bond="" price,="" par:="" par="" value,="" ttm:="" time="" to="" maturity,="" and="" y:="" yield).="" c_rate=""><- function="" (bond_value,="" par,="" ttm,="" y)="" {="" complete="" this="" part="" }="" b)="" [2="" points]="" using="" your="" own="" function="" created="" in="" part="" a),="" calculate="" coupon="" rate="" of="" the="" bond="" with="" bond_value="$1,172.61" par="$1,000" ttm="10" years="" y="6%" 2)="" suppose="" you="" have="" to="" find="" par="" value="" when="" you="" know="" all="" other="" variables,="" such="" as="" the="" bond="" price,="" coupon="" rate,="" time="" to="" maturity,="" and="" yield.="" to="" find="" par="" value="" instead="" of="" bond="" price,="" you="" can="" use="" the="" following="" formula="" (if="" you="" solve="" the="" equation="" above="" for="" par,="" you="" can="" easily="" obtain="" this="" formula.).="" 1="" par="Bond" price="" ×="" 1="" ∑?="1" (1="" +="" )?="" +="" (1="" +="" )?="" therefore,="" if="" you="" invest="" in="" a="" bond="" that="" has="" $1,070.919="" of="" current="" bond="" price,="" 7%="" of="" annual="" coupon="" rate,="" 4="" years="" to="" maturity,="" and="" 5%="" of="" yield,="" you="" can="" calculate="" par="" value="" as="" follows:="" #="" create="" time="" t="" t=""><- seq(1,="" 4,="" 1)="" #="" create="" present="" value="" factor="" pv_factor=""><- 1="" (1="" +="" 0.05)^t="" #="" coupon="" rate="" times="" pv_factor="" c_pv_factor=""><- 0.07="" *="" pv_factor="" #="" current="" bond="" price="" bond_value=""><- 1070.919="" #="" par="" value="" par=""><- bond_value="" (sum(c_pv_factor)="" +="" (1="" (1+0.05)^4))="" par="" [1]="" 1000="" a)="" [8="" points]="" referring="" to="" the="" codes="" above,="" create="" your="" own="" function="" to="" calculate="" par="" value.="" that="" is,="" you="" have="" to="" complete="" the="" body="" of="" the="" following="" function="" (bond_value:="" current="" bond="" price,="" c_rate:="" coupon="" rate,="" ttm:="" time="" to="" maturity,="" and="" y:="" yield).="" par=""><- function="" (bond_value,="" c_rate,="" ttm,="" y)="" {="" complete="" this="" part="" }="" b)="" [2="" points]="" using="" your="" own="" function="" created="" in="" part="" a),="" calculate="" par="" value="" of="" the="" bond="" with="" bond_value="$1,319.8278" c_rate="5%" ttm="13" years="" y="4%" ※="" extra="" credit="" (10="" points:="" no="" partial="" credits)="" –="" by="" your="" own="" research="" create="" your="" own="" function="" to="" approximately="" obtain="" yield.="" that="" is,="" complete="" the="" body="" of="" the="" following="" function:="" y=""><- function="" (bond_value,="" par,="" c_rate,="" ttm)="" {="" complete="" this="" part="" }="" note.="" you="" can="" obtain="" approximate="" yield.="" you="" would="" be="" able="" to="" see="" whether="" your="" function="" is="" correct="" or="" not,="" using="" the="" answers="" of="" part="" b)="" in="" 1)="" as="" well="" as="" part="" b)="" in="" 2).="" 3.="" in="" chapter="" 8,="" you="" can="" find="" how="" to="" calculate="" call="" and="" put="" option="" price="" by="" using="" black-scholes="" option="" pricing="" model.="" a)="" [12="" points]="" create="" your="" own="" function="" to="" calculate="" put="" option="" price.="" that="" is,="" you="" have="" to="" complete="" the="" body="" of="" the="" following="" function="" (s0:="" current="" stock="" price,="" k:="" strike="" price,="" r:="" risk-free="" rate,="" t:="" remaining="" time="" to="" maturity,="" and="" sigma:="" standard="" deviation="" of="" underlying="" stock="" price).="" put=""><- function="" (s0,="" k,="" r,="" t,="" sigma)="" {="" complete="" this="" part="" }="" b)="" [3="" points]="" using="" your="" own="" function="" created="" in="" part="" a),="" calculate="" put="" option="" price="" with="" s0="$1,000" k="$850" r="3%" t="3" years="" sigma="23%" ※="" extra="" credit="" (10="" points:="" no="" partial="" credits)="" –="" by="" your="" own="" research="" create="" your="" own="" function="" to="" approximately="" obtain="" sigma.="" that="" is,="" complete="" the="" body="" of="" the="" following="" function:="" sigma=""><- function (put, s0, k, r, t) { complete this part } note. you can obtain approximate sigma. you would be able to see whether your function is correct or not, using the answer of part b). function="" (put,="" s0,="" k,="" r,="" t)="" {="" complete="" this="" part="" }="" note.="" you="" can="" obtain="" approximate="" sigma.="" you="" would="" be="" able="" to="" see="" whether="" your="" function="" is="" correct="" or="" not,="" using="" the="" answer="" of="" part="">