7. Suppose you observe the following month-end stock prices for stocks A and B:

Day 0 1 2 3 4 Stock A 100 105 102 97 100 Stock B 100 105 150 97 100 For each stock:

a. Compute the mean monthly continuously compounded return. What is the annual return?

b. Compute the mean monthly standard deviation. What is the annual standard deviation?

c. Evaluate the statement: “The estimate of the mean depends only on the beginning and ending stock prices; the estimate of the standard deviation depends on all prices.”