Question

Go to Yahoo Finance and find historical stock price information for Microsoft. Export the daily data from 1/1/2012 to 10/1/2012 into Excel.

To download the historical prices, go to Yahoo Finance and type "Microsoft" into the search bar. Select the result with the ticker symbol "MSFT," click on "Historical Prices" in the left menu bar and set a date range from 1/3/2012 to 10/1/2012. Leave the "Daily" option checked and click on "Get prices."

At the bottom of the table, click on "Download to Spreadsheet." Depending on your browser, one of two things will happen:

1. Your browser downloads a file called "table.csv". Open the file in Excel; or
2. A new tab opens, showing the data in a comma-separated format. Select all data (control/command + a) and copy it into memory (control/command + c), then paste it into a new Excel spreadsheet (control/command + v). Highlight all data, then choose Data -> Text to Columns from the menu. Choose "Delimited", click on "Next" and check "Comma" on the next pane. Click "Finish.

a.How many observations are there (excluding the header row and dividend payments)?

b.What was the Holding Period Return (HPR) over the entire period?

c.What was the standard deviation of daily returns? Use Excel's STDEV function.

Answer 1

a. Excluding the header row and dividend payments there are 188 observations for "Microsoft"stock between 1st Jan 2012 to 1st Oct 2012.

b. Holding Period Return = Income + (End of Period Value – Initial Value) / Initial Value

= 0.2+0.2+0.2 + (29.76 - 26.55)/26.55

= (0.6 + 3.21)/26.55

= 14.35%

c. The standard deviation of daily returns as per Excel's STDEV function is 1.20539.