Question

P 12-11 (similar to) Question Help The following spreadsheet contains monthly returns for Cola Co. and Gas Co. for 2013. Using these data, estimate the average monthly return and the volatility for each stock. January February March April May June July August September October November Cola Co. - 1.80% -3.70% -0.05% -1.20% 1.90% 1.90% 0.60% -2.10% 4.10% -2.40% Gas Co. 8.20% -4,60% 5.50% 1.90% -1.00% 4.90% - 2.70% - 6.00% 4.50% 1.70% - 3.70% -8.60% The average monthly return for Cola Co. is % (Round places)

Answer 1

Coca Cola

Average = Sum of observations/Number of observations = -11.35%/11

=-1.03%

Standard deviation = SQRT(Sum of (X-Mean)^2)/(N-1))

= Sqrt(1.15%/(11-1))

= 3.39%

Gas

Average =16.1%/11 = 1.46%

Standard deviation = SQRT(Sum of (X-Mean)^2)/(N-1))

= Sqrt(2.04%/10)

= 4.51%

Workings

	Coca Cola	(X-Mean)	(X-Mean)^2		Gas	(X-Mean)	(X-Mean)^2
	-1.80%	-0.77%	0.01%		8.20%	6.74%	0.45%
	-3.70%	-2.67%	0.07%		-4.60%	-6.06%	0.37%
	-0.05%	0.98%	0.01%		5.50%	4.04%	0.16%
	-1.20%	-0.17%	0.00%		1.90%	0.44%	0.00%
	1.90%	2.93%	0.09%		-1%	-2.46%	0.06%
	1.90%	2.93%	0.09%		4.90%	3.44%	0.12%
	0.60%	1.63%	0.03%		-2.70%	-4.16%	0.17%
	-2.10%	-1.07%	0.01%		-6%	-7.46%	0.56%
	4.10%	5.13%	0.26%		4.50%	3.04%	0.09%
	-2.40%	-1.37%	0.02%		1.70%	0.24%	0.00%
	-8.60%	-7.57%	0.57%		3.70%	2.24%	0.05%
Total	-11.35%		1.15%	Total	16.10%		2.04%