FNCE 2010 – Excel Project 2
The assignment is designed for you to spend some time on your own or working with others to
develop better excel skills. The techniques you learn when developing this spreadsheet will be
used throughout the semester. When you have completed the assignment submit the
completed file to Canvas.
Description
Your boss has given you a data file of historical stock prices and has asked you to efficiently
compute average daily returns, variance and the standard deviation of those returns for each
𝑆𝑖
ticker symbol in the data set. She confirms to you that she wants log returns or ln (𝑆
𝑖−1
).
Overview
The spreadsheet you have been given has three tabs – Results, Calculations and Data. Your
boss should be able to only look at the results tab for the information she wants. All
calculations should be done on the Calculations tab and you should not change the data on the
Data tab.
The prices on the data tab are adjusted closing prices for various stocks and the S&P 500.
Adjusted closing prices are prices that have been adjusted for stock splits and other corporate
actions.
Your boss is not an expert Excel user and has not formatted the data. One of your tasks is to
format the spreadsheet sensibly.
The output is in a named range called Output. Do not under any circumstances remove or
change this named range. This assignment will be partially graded according to the results in
this range.
Step 0 – Create your spreadsheet
Click on the button in the creation spreadsheet. A personalized spreadsheet will be created for
you. You must complete your work in this spreadsheet. Everyone’s spreadsheet is slightly
different and has been created for you.
You can use the Grader spreadsheet to check that you have done the work correctly. I use this
spreadsheet for grading your project. If you have difficulties with the grader, please reach out.
Step 1 – Format the Spreadsheet
Video Lessons
Spreadsheet associated with videos
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TablesAndStyles ver 00.xlsx
Excel Cell Styles,
Excel Table: Create and Name,
Excel Table: Add and Delete,
Excel Table: Filter,
Excel Table: Style Options and
Excel Table: Structured Reference
Create the following new styles in your spreadsheet.
1. Date - The style should just include the number format. Unselect the other formats. It
should be DD-MMM-YY format.
2. Comma (2) – This style should just include the number format. It should be a comma
with two decimal places.
3. Comma (4) – This style should just include the number format. It should be a comma
with four decimal places.
4. Percent (4) - This style should just include the number format. This should be a
percentage with 4 decimal places.
For further detail on how to create new cell styles, check out the following link.
Format the data in the spreadsheet as follows:
1. The Date column should be formatted with the Date style
2. The columns with tickers as titles should be formatted with the Comma (2) style.
Ensure that all columns are wide enough to read the data in them.
Create a Table in your spreadsheet containing the data. Select the entire range and make sure
to tick the box that says your data has headers. Format the table using one of the medium
formats (one with a header row and alternating row shading. Name this table StockData.
Note, a common mistake is to create a named range called StockData instead of a table. The
grader will not work without the table. If you create the named range first, then you will not be
able to name your table correctly without deleting the named range using the name manager.
For more detail on how to create and name a table, watch this video
Step 2 – Compute Log Returns
Video – Percent vs. Log Returns
You are going to compute the log returns on the calculation tab. You will need to set up a range
with headings the same as those on the Data tab. You will need to reference the dates in the
StockData table but exclude the first date. Thus, you will have one fewer row than in the
StockData table.
𝑆𝑖
You then need to compute log returns using ln (𝑆
𝑖−1
) where 𝑆𝑖 is today’s value and 𝑆𝑖−1 is
yesterday’s value. Do this for every stock and date in your table. Be careful, excel may insert a
structured reference to some of the data which will make the formula not copy properly. You
should check a couple of calculations to make sure you have these formulas set up correctly.
Format your dates with the Date style and your calculations with the Percent (4) style and all
calculations with the Calculation style. Format headings and labels with a heading style.
For more information about log returns and why we use these rather than percent returns,
check out this video.
Step 3 – Compute Output
In the named range Output, you need to compute the average returns, variance, and standard
deviation of returns. Use the functions AVERAGE, VAR.S and STDEV.S for your calculations.
Format the output range with the Output style. Format the averages and standard deviations
with the Percent (4) style and the variances with the comma (4) style.
Format the labels surrounding the output using one of the heading styles.
Comments
There is an alternative to this implementation in the spreadsheet. One could have added
columns to the stock data directly. The advantage of this is that you are sure you have
completed the calculations. There are two disadvantages
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Mixing data and calculations is generally frowned upon from a computer science
perspective. It is easier to find mistakes when the data and the calculations are
separate
There is one fewer row of return data than there are rows in the Stock Data. This makes
for a harder formula if you want it to be such that it can be easily copied.
I have a preference to keep my calculations separate from the data, but it may be slightly easier
to implement the spreadsheet if I had not.