Problem regarding the tech stocks

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Tech Stocks

These data give the monthly returns on stocks in three technology companies: Dell, IBM, and Microsoft. For each month from January 1990 through the end of 2005 (192 months), the data give the return earned by owning a share of stock in each company. The return is the percentage change in the price, divided by 100.

(a) Describe and contrast histograms of the three companies. Be sure to use a common scale for the data axes of the histograms to make the comparison easier and more reliable.

(b) Find the mean, SD, and coefficient of variation for each set of returns. Are means and SDs useful summaries of variables such as these?

(c) What does comparison of the coefficients of variation tell you about these three stocks?

(d) Investors prefer stocks that grow steadily. In that case, what values are ideal for the mean and SD of the returns? For the coefficient of variation?

(e) It is common to find that stocks that have a high average return also tend to be more volatile, with larger swings in price. Is that true for these three stocks?

Reference no: EM131009266

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