Chapter 2, Problem 15P

Using the data in the following table, calculate the return for investing in Boeing stock (BA) from January 2, 2008, to January 2, 2009, and also from January 3, 2011, to January 3, 2012, assuming all dividends are reinvested in the stock immediately. The realized return from January 2, 2008, to January 2, 2009 is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Historical Stock and Dividend Data for Boeing Dividend Date 1/3/2011 2/9/2011 5/11/2011 8/10/2011 11/8/2011 1/3/2012 Date 1/2/2008 2/6/2008 5/7/2008 8/6/2008 11/5/2008 1/2/2009 Price $84.35 $80.07 $85.71 $63.71 $47.44 $44.97 $0.39 $0.39 $0.39 $0.00 Print Done Price $66.08 $72.91 $78.83 $55.86 $64.37 $75.65 Dividend $0.41 $0.41 $0.41 $0.41 X

Using the data in the following table,, estimate the: a. Average return and volatility for each stock. b. Covariance between the stocks. c. Correlation between these two stocks. a. Estimate the average return and volatility for each stock. The average return of stock A is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year Stock A 2010 2011 2012 2013 2014 2015 - 1% 6% 2% -5% 4% 6% Stock B 20% 9% 8% -3% - 5% 21% Print Done ☑ Clear

Using the data in the following table,, estimate the: a. Average return and volatility for each stock. b. Covariance between the stocks. c. Correlation between these two stocks. a. Estimate the average return and volatility for each stock. The average return of stock Ais %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 2010 2011 2013 Stock A - 5% 17% - 6% Stock B 29% 21% - 1% 2012 7% 4% 2014 1% - 15% 2015 13% 20%

Using the data in the following table, calculate the return for investing in the stock from January 1 to December 31. Prices are after the dividend has been paid. The realized return for the entire period is%. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Stock and Dividend Data Price $31.49 $29.52 $30.58 $31.41 $36.79 $43.08 Date Jan 1 Feb 5 May 14 Aug 13 Nov 12 Dec 31 Dividend $0.17 $0.22 $0.21 $0.21 - X

Using the data in the following table,, calculate the return for investing in Boeing stock (BA) from January 2, 2008, to January 2, 2009, and also from January 3, 2011, to January 3, 2012, assuming all dividends are reinvested in the stock immediately. The realized return from January 2, 2008, to January 2, 2009 is%. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Dividend Historical Stock and Dividend Data for Boeing Date 1/3/2011 2/9/2011 5/11/2011 8/10/2011 11/8/2011 1/3/2012 Date 1/2/2008 2/6/2008 5/7/2008 8/6/2008 11/5/2008 1/2/2009 Price $84.12 $77.43 $83.47 $64.69 $49.19 $44.46 $0.37 $0.37 $0.37 $0.00 Print Done Price $66.31 $72.71 $78.82 $56.87 $64.67 $73.36 Dividend $0.41 $0.41 $0.41 $0.41 - X

Using the data in the following table,, estimate the: a. Average return and volatility for each stock. b. Covariance between the stocks. c. Correlation between these two stocks. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 2010 2011 2013 Stock A - 10% 20% - 5% Stock B 21% 7% - 3% 2012 5% 30% 2014 2% - 8% 2015 9% 25% I

Using the data in the table to the right, calculate the return for investing in the stock from January 1 to December 31. Prices are after the dividend has been paid. (Click on the following icon in order to copy its contents into a spreadsheet.) Return for the entire period is %. (Round to two decimal places.) Date Jan 1 Feb 5 May 14 Aug 13 Nov 12 Dec 31 Price $32.09 $30.63 $31.95 $31.34 $36.15 $40.39 Dividend $0.21 $0.18 $0.18 $0.21

The following table represents the rate of returns of two stocks in different economic conditions along with their probabilities (the data are also uploaded on moodle) RATES OF RETURN ON STOCKS EXPECTED ECONOMIC PROBABILITY STOCK A STOCK B CONDITIONS RECESSION 0.55 -0.04 -0.02 STABLE 0.35 0.25 0.30 EXPANDING 0.10 0.15 0.20 Answer the following by using mathematical calculations: a) Calculate the expected rate of return for each stock respectively. Explain what the expected value implies. b) Calculate the standard deviation for each stock respectively. Explain what the standard deviation implies. c) If you were an investor in which stock you were going to invest? Justify your answer. d) Calculate the covariance between Stock A and stock B. Discuss. e) Calculate the expected return and the standard deviation of the portfolio consisting 40% in stock A and 60% in stock B. f) Discuss the risk and return associated with investing i All of your funds in stock A ii. All of your funds in stock…

1. Stock WatcherMark Martin has created a basic stock watcher worksheet that he uses to report on gains or losses from when he purchased the stock and the last recorded date and price. Mark has given you a snapshot of his spreadsheet (see Figure T2.20) that you can use to re-create this spreadsheet for yourself. Here are some basic steps to follow:1. Create a new workbook.2 . Enter all the information provided in Figure T2.20 .  3. Apply the Currency format to the respective columns.4. The date should be entered as a function. Hint: Use the NOW function.5. Enter a formula for the Gain/Loss (%) column. Hint: You should subtract the Last columnfrom the Purchase column, and then divide by the Purchase column.6 . Format for percent in the Gain/Loss (%) column.