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In our report, we will base on the dividend payment history and the weekly price for each of the two stocks in the past one year, to calculate the expect return and standard deviation for each of them.
According to the ANZ dividend payment history, it shows that the ANZ dividend paid semi-annually (every July and December). So it is still no dividend payment in 2013.

According to the BHP dividend payment history, it shows that the BHP dividend paid semi-annually (every March and September).

First of all, we should calculate the weekly expected return by formula (1).

rt= Pt-Pt-1+ dtPt-1 (Formula 1.)

rt= expected return of each week at time t. Pt= closing price at time t. Pt-1= opening price at time t. dt= dividend payment at time t.

Then, according to the formula (2), we could get the expected return for each of the two stocks by calculating the mean of all weekly expected return in the past one year.

r = t=1nrtn (Formula 2.)

n = the number of weeks during the past one year. r = the mean expected return.

After getting the mean expected return, we should use r to calculate the standard deviation for each of the two stocks by formula (3).

σr= t=1n(rt-r)2n-1 (Formula 3.) rt= expected return of each week at time t. r = the mean expected return. σr= the standard deviation of return.

In order to get the portfolio risk we should find the correlation coefficient between both two risk stocks first: σAB=t=1nrAt-rA(rBt-rB)n
Then to calculate the portfolio risk: σp2=σA2wA2+σB2wB2+2wAwBσAB

CAPM Model:

ANZ

BHP

Calculation details: 1. The weekly expected return: rt=Pt-Pt-1+