City Group

You will use the data you downloaded for your homework 1. In class I showed you that total risk = systematic risk + unsystematic risk. Total risk can be estimated from using past return data of a firm. In class (also in your slide and book) I used the following mathematical expression to estimate total risk. s_i^2=ß_i^2 s_m^2+s_e^2 From this expression you can easily find percentage of risk coming from systematic factors and unsystematic factors. You may follow the steps below. First, you need to regress your firm’s return on market return and find beta (coefficient). Second, use the regression and collect errors for monthly returns. Third, find variance of errors of returns and market returns. Fourth, you can use the above formula to find both types of risk and percentage of contribution of each type of risk to total risk (variance). Finally, you must comment on your findings. That is, you will write why your finding is justified or unexpected to you. Is it possible to reduce these two types of risk? How? You will submit your excel printout, calculation and comments. kindly pay extra attention this will thouroly examined before accepting the order attached is the homework and the data ( variance and standard deviation)