8. Using the data in the following table, estimate (a) the average return and volatility for each stock, (b) the covariance between the stocks, and (c) the correlation between these two stocks. Year Stock A Stock B 2004 -10% 21% 2005 20% 7% 2006 5% 30% 2007 -5% -3% 2008 2% -8% 2009 9% 25%
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- 4. Compare the high and the low common stock prices since 2007 in a graph of your choice for "XXX" Corporation. Write a brief interpretation of the main features of the data portrayed in the graph. The high and the low common stock prices for the "XXX" Corporation since 1983 are: Year High Low 2007 40.85 30.90 2008 40.85 30.00 2009 40.85 29.25 2010 48.00 34.00 2011 64.75 32.00 Year High Low 2013 72.00 45.75 2014 81.65 63.25 2015 80.15 63.50 2016 75.35 60.25 2017 98.35 67.75 2018 99.00 70.00 2012 51.75 39.65Below are percentages for annual sales growth and net sales attributed to loyalty card usage at 74 Noodles & Company restaurants. Annual Sales Growth (px;) and Loyalty Card Usage (px; of Net Sales)(n = 74 restaurants) Store Growth% Loyalty% Store Growth% Loyalty% 1 -7.8 0.7 38 7.3 1.5 2 -6.9 2.5 39 7.4 1.7 3 -5.1 1.6 40 7.7 2.3 4 -4.7 1.4 41 8.0 2.0 5 -3.8 2.5 42 8.0 1.6 6 -1.7 1.5 43 8.3 1.9 7 -1.7 2.6 44 8.4 2.0 8 -1.6 2.4 45 8.6 2.2 9 -1.1 2.2 46 8.6 1.6 10 -1.0 1.9 47 8.7 0.9 11 0.4 1.2 48 8.9 1.7 12 0.6 0.5 49 9.4 1.6 13 0.6 2.1 50 9.5 1.3 14 1.0 1.3 51 9.5 2.1 15 1.3 2.0 52 10.5…The rate of return for the last 19 years of a certain segment of the stock market is given in the table. (The data is also provided below the table as a comma-separated list to make it easier to copy.) Market Segment Rate of Return, 2002-2020 Year Rate of Return (%) 2020 3.23 2019 6.14 2018 11.39 2017 15.99 2016 3.24 2015 -3.86 2014 -1.04 2013 8.49 2012 5.93 2011 6.96 2010 1.98 2009 3.13 2008 -6.55 2007 7.27 2006 3.02 2005 -1.34 2004 7.28 2003 6.27 2002 -0.76 Rate of Return (%): 3.23, 6.14, 11.39, 15.99, 3.24, -3.86, -1.04, 8.49, 5.93, 6.96, 1.98, 3.13, -6.55, 7.27, 3.02, -1.34, 7.28, 6.27, -0.76 Find the 34th percentile of the data. 6.46
- 1. Explain, why doesn’t an estimated absolute covariance number tell the investor much about the relationship between the returns on the two assets?Annualized percentage return on investment (as compared to the Standard & Poor's 500 Index) for 10 randomly selected stock screeners are reproduced in the table. Complete parts a through c.Forecasting Methods: Perform Trend Series Analysis (sales projection for the year 10, 12 and 17) Make based on the sales data below:Year 1: 24,333; Year 2: 33,524; Year 3: 26,778; Year 4: 30,567; Year 5: 27,564; Year 6: 24,555; Year 7: 21,777 and Year 8: 25,669.
- The stock market did well during the 1990s. Here are the percent total returns (change in price plus dividends paid) for the Standard & Poor's 500 stock index: Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Return –3.1 30.5 7.6 10.1 1.3 37.6 23.0 33.4 28.6 21.0 Reference: Ref 14-1 The correlation of U.S. stock returns with overseas stock returns during these years was about r = 0.4. This tells you thatThe Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 14.7% (i.e. an average gain of 14.7%) with a standard deviation of 33%. A return of 0% means the value of the portfolio doesn't change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. (please round answers to within one hundredth of a percent) (a) What percent of years does this portfolio lose money, i.e. have a return less than 0%? (b) What is the cutoff for the highest 15% of annual returns with this portfolio?The Seneca Children’s Fund (SCF) is a local charity that runs a summer camp for disadvantaged children. The fund’s board of directors has been working very hard over recent years to decrease the amount of overhead expenses, a major factor in how charities are rated by independent agencies. The following data show the percentage of the money SCF has raised that was spent on administrative and fund-raising expenses over the past seven years: Year Period (t) Expense (%) 2003 1 13.9 2004 2 12.2 2005 3 10.5 2006 4 10.4 2007 5 11.5 2008 6 10.0 2009 7 8.5 a. Construct a time series plot. What type of pattern exists in the data?b. Use simple linear regression analysis to find the parameters for the line that minimizes MSE for this time series.c. Forecast the percentage of administrative expenses for year 8.d. If SCF can maintain its current trend in reducing administrative expenses, how long will it take for SCF to achieve a level of 5% or less?
- There are two underlying assets in an asset pool. Each has a 2.8 percentchanges of failing. You own an asset that will pay $1 unless both assets fail. Graph theprobability of your asset not paying as the correlation between the two input assets runsfrom 0.5 to 0.98. For what levels of correlation is the output asset investment gradeThe Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 14.7% (i.e. an average gain of 14.7%) with a standard deviation of 33%. A return of 0% means the value of the portfolio doesn’t change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. What percent of years does this portfolio lose money, i.e. have a return less than 0%? What is the cutoff for the highest 15% of annual returns with this portfolio?Hi! I was working on the question below: The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 14.7% (i.e. an average gain of 14.7%) with a standard deviation of 33%. A return of 0% means the value of the portfolio doesn’t change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. And question (a) looks like: What percent of years does this portfolio lose money, i.e. have a return less than 0%? I got a z-score of -0.4455, which corresponds to the p value of 0.3264 on the z-table; I don't understand why the correct answer should be 0.3280 as said by one of the solutions, and I cannot locate such a number on the z-table. Thank you so much!