3 questions please

1.Discuss if the stock market and individual stocks are more volatile today than in the past. Further discuss using the information from a study by Campbell, Makiel and Xu.(2001). This study looked at 9000 firms from 1962-97. They decomposed the stock into market-wide.. industry-wide and firm-specific volatility. They found that the while there were periods of increased volatility, for example, during the oil crisis in the 1970's, average market volatility , as measured by standard deviation has remained relatively stable over time-14% in the 1970s, 16% in the 1980s and 11% in the 1990s. Industry volatility has remained stable over time. Firm specific volatility, on the other hand, more than doubled from 1962-1997, the period of the study. The most volatile stocks moved 25% in a single day. Firm-specific risk accou for a greater percentage of firm total risk. Firm specific volatility was 65% of total volatility in 1962 and 76% in 1997. 2. Honourable students why is it that individual stocks can be more volatile, yet not the market as a whole. A University of Nevada study at about the same time found that 100 stocks were needed to achieve complete diversification. The University of Nevada study found that the main culprits advocating too few stocks for diversification were textbooks, professional journals and the wall street Journal which has since printed a story about this study) Some individuals choose to hold portfolios with a smaller number of stocks because it is difficult to research a larger number of stocks. 3. Why are individual stocks more volatile? Why do investors think the market as a whole is more volatile