Create an Appendix for the novice investor. Clearly explain the meaning and implication of the following key variables or equations: CAPM equation.

The purpose of this assignment is to analyze the investment opportunity set for a two-asset portfolio. You are required to select two stocks and complete an analysis over the period for the previous fiscal year . Your portfolio provides an overview of the process used to create the investment opportunity set and provide an analysis regarding the resulting investment opportunity set you created. In addition to describing the steps and providing exhibits to illustrate the creation of the investment opportunity set, the implication of the following key variables also needs to be explained:
CAPM equation
Risk Free Rate
Risk Premium
Beta
Required Rate of Return

Obtain daily market returns for two stocks in the S&P500
Calculate daily holding period returns for each stock
Note: Yahoo! Finance gives you an adjusted closing price for a stock
Calculate Beta for each stock using linear regression analysis. Include this analysis as part of the project.
Calculate expected return for a two-asset portfolio using 10% increments
Use Capitol Asset Pricing Model , however, in order to use CAPM you need Beta, Risk-Free Rate , and Market Risk Premium . For this analysis, assume risk premium = 7% (historical information actually suggest MRP = 8.5% but we will assume 7%). Calculate the overall portfolio standard deviation or “risk of the portfolio”
Use 10% increments for the weights of the assets
Calculate variance and standard deviation of each stock and the correlation coefficient. Your expected return in #3 is in years, and your standard deviation is in days. Convert daily standard deviation to yearly standard deviation by considering the number of days in the year
Display investment opportunity set graphically and explain implications and potential investment strategies to consider
Create an Appendix for the novice investor. Clearly explain the meaning and implication of the following key variables or equations:
CAPM equation
Risk-Free Rate
Risk Premium
Beta
Required Rate of Return