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Total assignment points (100 points)
1. Follow the steps outlined in Appendices A and B and download the monthly return time series for the following assets:
• U.S. stock market index, and
• U.S. Treasury bills maturing in three months.1 Produce two separate plots:
• First, generate one plot containing the monthly log return time series of both assets from January 1934 to December 2018.
• Second, suppose you invest 1$ at the end of December 1933 in each asset and hold it until
the end of December 2018. Generate a plot which shows how your initial investment of 1$
evolves over time.
Save both plots (e.g., as pdf file) and put them into your solution paper. Take a close look at
both graphs. What do you learn from this about the returns across both asset classes?