How does the relationship between the average return and the

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1.Download the spreadsheet from MyFinanceLab that contains historical monthly prices and dividends (paid at the end of the month) for Ford Motor Company stock (Ticker: F) from August 1994 to August 1998. Calculate the realized return over this period, expressing your answer in percent per month.

2.Using the same data as in Problem 10, compute the

a. Average monthly return over this period.

b. Monthly volatility (or standard deviation) over this period.

3.Explain the difference between the average return you calculated in Problem 2(a) and the realized return you calculated in Problem 10. Are both numbers useful? If so, explain why.

4.Compute the 95% confidence interval of the estimate of the average monthly return you calculated in Problem 2(a).

5.How does the relationship between the average return and the historical volatility of individual stocks differ from the relationship between the average return and the historical volatility of large, well-diversified portfolios?

Reference no: EM13495430

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