Compute the mean monthly standard deviation

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Reference no: EM132066619

Suppose you observe the following month-end stock prices for stocks A and B:

Day

0 1 2 3 4

Stock A 100 105 102 97 100

Stock B 100 105 150 97 100

For each stock:

a) compute the mean monthly continuously compounded return. What is the annual return?

b) compute the mean monthly standard deviation. What is the annual standard deviation?

c) Evaluate the statement: "The estimate of the mean depends only on the beginning and ending stock prices; the estimate of the standard deviation depnds on all prices."

Reference no: EM132066619

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