Concept explainers
a.
Find the population standard deviation for the prices in May.
a.
Answer to Problem 6RE
- The population standard deviation for the prices in May is 0.791.
Explanation of Solution
Calculation:
The closing prices of google stock in May and June are given.
Standard deviation:
Let
Population standard deviation:
Finding mean:
Software procedure:
Step-by-step procedure to find mean using the MINITAB software:
- Choose Stat > Basic Statistics > Display
Descriptive Statistics . - In Variables enter the columns May.
- Choose option statistics, and select N total, Mean.
- Click OK.
Output using the MINITAB software is given below:
- From the MINITAB output the mean is 34.479.
The deviation, deviation’s squares are calculated below:
x | ||
34.54 | 0.061 | 0.004 |
33.27 | –1.209 | 1.462 |
34.4 | –0.079 | 0.006 |
35.67 | 1.191 | 1.418 |
33.16 | –1.319 | 1.74 |
34.62 | 0.141 | 0.02 |
33.49 | –0.989 | 0.978 |
34.72 | 0.241 | 0.058 |
34.96 | 0.481 | 0.231 |
32.72 | –1.759 | 3.094 |
34.35 | –0.129 | 0.017 |
34.59 | 0.111 | 0.012 |
35 | 0.521 | 0.271 |
34.78 | 0.301 | 0.091 |
33.67 | –0.809 | 0.654 |
34.98 | 0.501 | 0.251 |
34.84 | 0.361 | 0.13 |
34.99 | 0.511 | 0.261 |
33.72 | –0.759 | 0.576 |
35 | 0.521 | 0.271 |
35.47 | 0.991 | 0.982 |
35.59 | 1.111 | 1.234 |
Total |
Substituting
- Hence, the population standard deviation for the prices in May is 0.791.
b.
Find the population standard deviation for the prices in June.
b.
Answer to Problem 6RE
- The population standard deviation for the prices in June is 0.814.
- .
Explanation of Solution
Calculation:
Population standard deviation:
Finding mean:
Software procedure:
Step-by-step procedure to find mean using the MINITAB software:
- Choose Stat > Basic Statistics > Display Descriptive Statistics.
- In Variables enter the columns June.
- Choose option statistics, and select N total, Mean.
- Click OK.
Output using the MINITAB software is given below:
- From the MINITAB output the mean is 34.052.
The deviation, deviation’s squares are calculated below:
x | ||
34.9 | 0.848 | 0.719 |
34.15 | 0.098 | 0.01 |
34.08 | 0.028 | 8E–04 |
32.66 | –1.392 | 1.938 |
35.03 | 0.978 | 0.956 |
34.61 | 0.558 | 0.311 |
33.85 | –0.202 | 0.041 |
32.99 | –1.062 | 1.128 |
34.88 | 0.828 | 0.686 |
34.85 | 0.798 | 0.637 |
33.53 | –0.522 | 0.272 |
33.31 | –0.742 | 0.551 |
35.02 | 0.968 | 0.937 |
35.08 | 1.028 | 1.057 |
33.03 | –1.022 | 1.044 |
33.75 | –0.302 | 0.091 |
34.27 | 0.218 | 0.048 |
34.87 | 0.818 | 0.669 |
32.69 | –1.362 | 1.855 |
33.49 | –0.562 | 0.316 |
Total |
Substituting
- Hence, the population standard deviation for the prices in June is 0.814.
c.
Find the month when the price of Google stock more volatile.
c.
Answer to Problem 6RE
- The spreads for the prices in June has increased in 2013.
Explanation of Solution
- The financial analysts use the term “volatility” for referring the price variation of assets as stocks.
- From part (a), the population standard deviation for the prices in May is 0.791.
- From part (b), the population standard deviation for the prices in June is 0.814.
- The standard deviation for the prices in June is slightly more than the population standard deviation for the prices in May.
- Thus, it can be concluded that the spreads for the prices in June is more volatile than May.
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