Concept explainers
a)
The population standard deviation of the prices in May.
a)
Answer to Problem 6RE
Population standard deviation of the prices in May = 0.79
Explanation of Solution
May:
First need to find mean.
Formula:
Formula:
Calculation:
Using data,
Mean =
And n = 22
Creating a table for finding population standard deviation.
34.54 | 0.06 | 0.00 |
34.62 | 0.14 | 0.02 |
34.35 | -0.13 | 0.02 |
33.67 | -0.81 | 0.66 |
33.72 | -0.76 | 0.58 |
33.27 | -1.21 | 1.46 |
33.49 | -0.99 | 0.98 |
34.59 | 0.11 | 0.01 |
34.98 | 0.5 | 0.25 |
35 | 0.52 | 0.27 |
34.4 | -0.08 | 0.01 |
34.72 | 0.24 | 0.06 |
35 | 0.52 | 0.27 |
34.84 | 0.36 | 0.13 |
35.47 | 0.99 | 0.98 |
35.67 | 1.19 | 1.42 |
34.96 | 0.48 | 0.23 |
34.78 | 0.3 | 0.09 |
34.99 | 0.51 | 0.26 |
35.59 | 1.11 | 1.23 |
33.16 | -1.32 | 1.74 |
32.72 | -1.76 | 3.10 |
Sum | 13.76 |
From table,
Put in a formula,
Population standard deviation = 0.79
b)
The population standard deviation of June.
b)
Answer to Problem 6RE
Population standard deviation for June is 0.81.
Explanation of Solution
June:
First need to find mean.
Formula:
Calculation:
Using data,
Mean =
Creating a table for finding population standard deviation.
34.9 | 0.85 | 0.72 |
35.03 | 0.98 | 0.96 |
34.88 | 0.83 | 0.69 |
35.02 | 0.97 | 0.94 |
34.27 | 0.22 | 0.05 |
34.15 | 0.1 | 0.01 |
34.61 | 0.56 | 0.31 |
34.85 | 0.8 | 0.64 |
35.08 | 1.03 | 1.06 |
34.87 | 0.82 | 0.67 |
34.08 | 0.03 | 0.00 |
33.85 | -0.2 | 0.04 |
33.53 | -0.52 | 0.27 |
33.03 | -1.02 | 1.04 |
32.69 | -1.36 | 1.85 |
32.66 | -1.39 | 1.93 |
32.99 | -1.06 | 1.12 |
33.31 | -0.74 | 0.55 |
33.75 | -0.3 | 0.09 |
33.49 | -0.56 | 0.31 |
Sum | 13.27 |
From table,
Put in a formula,
Population standard deviation = 0.81
c)
To check: The volatility of the prices of May and June.
c)
Answer to Problem 6RE
Variation (volatility) of Jun is slightly higher than May.
Explanation of Solution
To check variation in prices for May and June, first need to check coefficient of variance for both months. The lower the value of the coefficient of variation (CV), the more precise the estimate.The higher the CV, the higher would be the variation in prices.
Formula:
Calculation:
May:
June:
Here the CV of June is slightly higher than May. This shows the variation in prices in June which is slightly higher as compared to the prices of May.
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