QUESTION 1 You have observed a particular stock over the past year. Monthly returns have been as follows: -7%, -7%, 11%, -8%, 0%, 2%, 2%, -5%, -1%, -2%, -4%, 11%. Using Excel, calculate the average monthly returns to the nearest hundredth of a percent (.01). The average function is =average(). QUESTION 2 You have observed a particular stock over the past year. Monthly returns have been as follows: 1%, -6%, 9%, -7%, 12%, -4% , -9%, -1%, 11%, 2%, -6%, -11%. Using Excel, calculate the standard deviation. For the standard deviation of a sample, use =stdev.s(). 7.886986 8.005207 6.680478 6.939129

QUESTION 1 You have observed a particular stock over the past year. Monthly returns have been as follows: -7%, -7%, 11%, -8%, 0%, 2%, 2%, -5%, -1%, -2%, -4%, 11%. Using Excel, calculate the average monthly returns to the nearest hundredth of a percent (.01). The average function is =average(). QUESTION 2 You have observed a particular stock over the past year. Monthly returns have been as follows: 1%, -6%, 9%, -7%, 12%, -4% , -9%, -1%, 11%, 2%, -6%, -11%. Using Excel, calculate the standard deviation. For the standard deviation of a sample, use =stdev.s(). 7.886986 8.005207 6.680478 6.939129

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Calculating Real Returns and Risk Premiums You’ve observed the following returns on Bennington Corporation’s stock over the past five years: 13 percent, −8 percent, 16 percent, 16 percent, and 10 percent. Suppose the average inflation rate over this period was 1.5 percent and the average T-bill rate over the period was 5 percent. a. What was the average real return on the company's stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the average nominal risk premium on the company's stock?
Problem 3:Here are the annual returns for five different stocks. Determine the expected return and risk for a period of five years for each of the stocks. Problem 4:a. Find the coefficient of variation (CV) for each of the actions in problem 3.b. Explain which of the investments a risk averse investor would prefer and which a risk lover investor would prefer. Answer clearly and in detail. Show all the computations that led to the result.
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