Using the data shown in the table​ below 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, compute​ the: a. Average monthly return over this period is --%. ​(Round to two decimal​ places.) b. Monthly volatility​ (or standard​ deviation) over this period. ​(Round to two decimal​ places.) c. compute 95% confidence interval of the estimate of the average monthly return. Date    Stock Price    Dividend    Return    1+Rt Aug-94    $29.250    $0.000         Sep-94    $27.750    $0.000    -5.13%    0.949 Oct-94    $29.500    $0.260    7.24%    1.072 Nov-94    $27.125    $0.000    -8.05%    0.919 Dec-94    $27.875    $0.000    2.76%    1.028 Jan-95    $25.250    $0.260    -8.48%    0.915 Feb-95    $26.125    $0.000    3.47%    1.035 Mar-95    $26.875    $0.000    2.87%    1.029 Apr-95    $27.125    $0.310    2.08%    1.021 May-95    $29.250    $0.000    7.83%    1.078 Jun-95    $29.750    $0.000    1.71%    1.017 Jul-95    $29.000    $0.310    -1.48%    0.985 Aug-95    $30.750    $0.000    6.03%    1.06 Sep-95    $31.125    $0.000    1.22%    1.012 Oct-95    $28.750    $0.350    -6.51%    0.935 Nov-95    $28.250    $0.000    -1.74%    0.983 Dec-95    $28.875    $0.000    2.21%    1.022 Jan-96    $29.500    $0.350    3.38%    1.034 Feb-96    $31.250    $0.000    5.93%    1.059 Mar-96    $34.375    $0.000    10.00%    1.1 Apr-96    $35.875    $0.350    5.38%    1.054 May-96    $36.500    $0.000    1.74%    1.017 Jun-96    $32.375    $0.000    -11.30%    0.887 Jul-96    $32.375    $0.385    1.19%    1.012 Aug-96    $33.500    $0.000    3.47%    1.035 Sep-96    $31.250    $0.000    -6.72%    0.933 Oct-96    $31.250    $0.385    1.23%    1.012 Nov-96    $32.750    $0.000    4.80%    1.048 Dec-96    $32.250    $0.000    -1.53%    0.985 Jan-97    $32.125    $0.385    0.81%    1.008 Feb-97    $32.875    $0.000    2.33%    1.023 Mar-97    $31.375    $0.000    -4.56%    0.954 Apr-97    $34.750    $0.420    12.10%    1.121 May-97    $37.500    $0.000    7.91%    1.079 Jun-97    $38.000    $0.000    1.33%    1.013 Jul-97    $40.875    $0.420    8.67%    1.087 Aug-97    $43.000    $0.000    5.20%    1.052 Sep-97    $45.125    $0.000    4.94%    1.049 Oct-97    $43.688    $0.420    -2.25%    0.977 Nov-97    $43.000    $0.000    -1.57%    0.984 Dec-97    $48.563    $0.000    12.94%    1.129 Jan-98    $51.000    $0.420    5.88%    1.059 Feb-98    $56.563    $0.000    10.91%    1.109 Mar-98    $64.813    $0.000    14.59%    1.146 Apr-98    $45.813    $23.680    7.22%    1.072 May-98    $51.875    $0.000    13.23%    1.132 Jun-98    $59.000    $0.000    13.73%    1.137 Jul-98    $57.000    $0.420    -2.68%    0.973 Aug-98    $44.625    $0.000    -21.71%    0.783

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Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.