(VAR.P and STDEV.P) Choose two well-known stocks and download the latest 61 months of adjusted prices from finance.yahoo.com. Calculate the monthly returns for each stock. Now find the variance and standard deviation of the returns for each stock by using VAR.P and STDEV.P. Annualize the variance by multiplying by 12 and the standard deviation by multiplying by the square root of 12.
To determine: The variance and standard deviation of two stocks.
Answer to Problem 1SQ
Company AL’s variance is 0.0008497 and standard deviation is 2.91%. Company NX’s variance is 0.0014812 and standard deviation is 3.85%.
Explanation of Solution
Determine the variance and standard deviation of Company AL
Excel Spreadsheet:
Excel Workings:
Therefore the Company AL’s variance is 0.0008497 and standard deviation is 2.91%. Company NX’s variance is 0.0014812 and standard deviation is 3.85%.
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