ZuoTi.Pro
Question

Take a look at the following sample of stock returns % for Apple and Microsoft from...

Take a look at the following sample of stock returns % for Apple and Microsoft from 2006 to 2010:

Year Apple Microsoft
2006 3 1
2007 2 -2
2008 4 3
2009 6 0
2010 0 3

a. Calculate the covariance between the two stock returns. (Hint: throughout this question please do not use the Geometric mean formula to calculate the mean returns. Use the sample mean formula instead)

b. Calculate the correlation coefficient between the two stock returns.

c. Are Apple and Microsoft returns linearly related? Briefly explain, based on your responses to parts (a) and (b).

math   Statistics-And-Probability   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

χ cmd y are random Variable Yepresent microsoft cvwol Cov(x, V) V(x) viy) ol fav scatter plot or uue can s Sau fr lars Corweletion We oill manually as encel or also can 2. 200 2.2 2.2 06Y 2010 O Tote L. anhere the correlation between x and y is very closed to 0 therefore we can say that x and y are not linearly related.

0 0
Add a comment
Know the answer?
Add Answer to:
Take a look at the following sample of stock returns % for Apple and Microsoft from...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 4. You have observed the following returns for Market, Apple, and Microsoft for last 3 vearS:...

    4. You have observed the following returns for Market, Apple, and Microsoft for last 3 vearS: Period Market 0.12 0.10 0.09 0.15 0.10 0.13 Microsoft 0.07 0.05 0.03 a) Calculate the market's return and standard deviation. Write out all the setups for each calculation. Use sample standard deviation formula. b) Calculate both the sample covariance and correlation coefficient between the market and Apple, and between the market and Microsoft. Write out all the setups for each calculation Calculate the betas...

  • The realized returns for stock A and stock B from 2004-2009 are provided in the table...

    The realized returns for stock A and stock B from 2004-2009 are provided in the table below Year 2004 2005 2006 2007 2008 2009 Stock A -9% 21% 6% -4% 3% 10% Stock B 23% 9% 32% -1% -6% 27% (a) Calculate the expected returns (as percents) over the next year for the stocks assuming the average annual realized returns and past volatility from 2004-2009 are unbiased estimators of expected returns and future volatility. stock A 4.5 stock B 14...

  • Please show work and all steps! The realized returns for stock A and stock B from...

    Please show work and all steps! The realized returns for stock A and stock B from 2004-2009 are provided in the table below Year 2004 2005 2006 2007 2008 2009 Stock A -8% 22% 7% -3% 4% 11% Stock B 20% 6% 29% -4% -9% 24% Suppose you create a portfolio that is 60% invested in stock A and 40% invested in stock B. The correlation between the returns of the two stocks is 6.27% (a) Calculate the expected return...

  • The realized returns for stock A and stock B from 2004–2009 are provided in the table...

    The realized returns for stock A and stock B from 2004–2009 are provided in the table below Year 2004 2005 2006 2007 2008 2009 Stock A −9% 21% 6% −4% 3% 10% Stock B 19% 5% 28% −5% −10% 23% (a) Calculate the expected returns (as percents) over the next year for the stocks assuming the average annual realized returns and past volatility from 2004–2009 are unbiased estimators of expected returns and future volatility. stock A %stock B % Calculate...

  • Suppose you have collected the following historical returns for 2 stocks (Stock A and Stock B)....

    Suppose you have collected the following historical returns for 2 stocks (Stock A and Stock B). Your task is to summarize the data using the following statistical measures: expected return, variance, standard deviation, covariance, and correlation. Stock A Stock B 2010 0.10 0.07 2009 -0.02 0.01 2008 0.08 -0.03 Estimate the expected return for each stock. In a short description, what do these numbers represent? (For the quiz, provide the expected return for Stock A.) Estimate the return variance and...

  • Consider the following realized annual returns: Year Stock A Index 2000 23.6% 50.3% 2001 24.7% 30.7%...

    Consider the following realized annual returns: Year Stock A Index 2000 23.6% 50.3% 2001 24.7% 30.7% 2002 30.5% 86.9% 2003 9.0% 23.1% 2004 -2.0% 0.2% 2005 -17.3% -3.2% 2006 -24.3% -27.0% 2007 32.2% 27.9% 2008 4.4% -5.1% 2009 7.4% -11.3% a. Calculate the average of annual returns of the index. b. Compute the standard deviation of annual returns of the index. c. Compute the lower bound of the 95% confidence interval for annual returns of the index. Use the exact...

  • Question7Task 19 v2 Consider the following realized annual returns: Year Stock A Index 2000 23.6% 47.3%...

    Question7Task 19 v2 Consider the following realized annual returns: Year Stock A Index 2000 23.6% 47.3% 2001 24.7% 27.7% 2002 30.5% 86.9% 2003 9.0% 23.1% 2004 -2.0% 0.2% 2005 -17.3% -3.2% 2006 -24.3% -27.0% 2007 32.2% 27.9% 2008 4.4% -5.1% 2009 7.4% -11.3% a. Calculate the average of annual returns of the index. b. Compute the standard deviation of annual returns of the index. c. Compute the lower bound of the 95% confidence interval for annual returns of the index....

  • Use the following historical stock returns for GAF, Inc. to answer questions 19 and 20: Year...

    Use the following historical stock returns for GAF, Inc. to answer questions 19 and 20: Year Annual Stock Return 2005 13% 2006 1% 2007 -6% 2008 19% 2009 39% 2010 46% 2011 6% 2012 -4% 2013 14% 2014 -6% 2015 8% 2016 0% 2017 16% 2018 22% 19. What was the average annual historical return for GAF, Inc. over the 14 year period? 20. What was the standard deviation of returns for GAF, Inc. stock over the 14 year time...

  • 2005 Use the following historical stock returns for GAF, Inc. to answer questions 19 and 20:...

    2005 Use the following historical stock returns for GAF, Inc. to answer questions 19 and 20: Year Annual Stock Return 13% 2006 1% 2007 -6% 2008 19% 2009 39% 46% 2011 6% 2012 -4% 2013 14% 2014 -6% 2015 8% 2016 0% 2017 16% 2018 22% 2010 19. What was the average annual historical return for GAF, Inc. over the 14 year period? 20. What was the standard deviation of returns for GAF, Inc. stock over the 14 year time...

  • What is 9. Here are stock market and Treasury bill percentage returns between 2006 and 2010:...

    What is 9. Here are stock market and Treasury bill percentage returns between 2006 and 2010: T-Bill Return Year 2006 2007 2008 2009 2010 Stock Market Return 15.770 5.610 -37.230 28.300 17.160 4.800 4.660 1.600 0.100 0.120 a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? d. What is the coefficient of variation?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT