INVESTMENTS (LL)
11th Edition
ISBN: 9781260150407
Author: Bodie
Publisher: MCG
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Chapter 12, Problem 22PS
Summary Introduction
To compute:
The change from last year to current year in the confidence index
Introduction:
Confidence index reflects the faith of investor in the security market and the economy. A deteriorating or low confidence index is considered as a bearish sign by the technical analyst. On the other hand A high or increasing level of confidence index is considered as a bullish sign by technical analyst.
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Answer the question:
Given the following historical returns, calculate the average return and the standard deviation:
Year
Return
1
14%
2
10%
3
15%
4
11%
Two investments generated the following annual returns (refer to image):
a. What is the average annual return on each investment?b. What is the standard deviation of the return on investments X and Y?c. Based on the standard deviation, which investment was riskier?
Use the data shown in the following table:
K
a. Compute the average return for each of the assets from 1929 to 1940 (the Great Depression).
b. Compute the variance and standard deviation for each of the assets from 1929 to 1940.
c. Which asset was the riskiest during the Great Depression? How does that fit with your intuition?
Note: For all your answers type decimal equivalents.
Data table
Year
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
S&P 500
-0.08906
-0.25256
- 0.43861
-0.08854
0.52880
-0.02341
0.47221
0.32796
-0.35258
0.33204
-0.00914
- 0.10078
Small Stocks
- 0.43081
-0.44698
-0.54676
-0.00471
2.16138
0.57195
0.69112
0.70023
- 0.56131
0.08928
0.04327
-0.28063
Corp. Bonds
0.04320
0.06343
-0.02380
0.12199
0.05255
0.09728
0.06860
0.06219
0.02546
0.04357
0.04247
0.04512
World Portfolio
-0.07692
-0.22574
-0.39305
0.03030
0.66449
0.02552
0.22782
0.19283
-0.16950
0.05614
-0.01441
0.03528
Treasury Bills
0.04471
0.02266
0.01153
0.00882
0.00516
0.00265
0.00171
0.00173…
Chapter 12 Solutions
INVESTMENTS (LL)
Ch. 12 - Prob. 1PSCh. 12 - Prob. 2PSCh. 12 - Prob. 3PSCh. 12 - Prob. 4PSCh. 12 - Prob. 5PSCh. 12 - Prob. 6PSCh. 12 - Prob. 7PSCh. 12 - Prob. 8PSCh. 12 - Prob. 9PSCh. 12 - Prob. 10PS
Ch. 12 - Prob. 11PSCh. 12 - Prob. 12PSCh. 12 - Prob. 13PSCh. 12 - Prob. 14PSCh. 12 - Prob. 15PSCh. 12 - Prob. 16PSCh. 12 - Prob. 17PSCh. 12 - Prob. 18PSCh. 12 - Prob. 19PSCh. 12 - Prob. 20PSCh. 12 - Prob. 21PSCh. 12 - Prob. 22PSCh. 12 - Prob. 23PSCh. 12 - Prob. 24PSCh. 12 - Prob. 25PSCh. 12 - Prob. 1CPCh. 12 - Prob. 2CPCh. 12 - Prob. 3CPCh. 12 - Prob. 4CPCh. 12 - Prob. 5CP
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