7. (Expected return, standard deviation, and capital asset pricing model) The following are the end-of-month prices for both the Standard & Poor's 500 Index and Nike's common stock. a. Using the data in the popup window, calculate the holding-period returns for each of the months. b. Calculate the average monthly return and the standard deviation for both the S&P 500 and Nike. c. Develop a graph that shows the relationship between the Nike stock returns and the S&P 500 Index. (Show the Nike returns on the vertical axis and the S&P 500 Index returns on the horizontal axis.) d. From your graph, describe the nature of the relationship between Nike stock returns and the returns for the S&P 500 Index. a. Using the data in the table, calculate the holding-period returns for each of the months for both the Standard & Poor's 500 Index and Nike's common stock and fill in the blanks below. (Round to two decimal places.) S&P 500 NIKE S&P 500 NIKE RETURN INDEX RETURN 2017 January $52.90 $2,279 February 57.16 2,364 % February 57.16 2,364 March 55.73 % 2,363 % March 55.73 2,363 April 55.41 % 2,384 % April 55.41 2,384 May 52.99 % 2,412 % May 52.99 2,412 June 59.00 % 2,423 % June 59.00 2,423 July 59.05 % 2,470 % July 59.05 2,470 August 52.81 % 2,472 % August 52.81 2,472 September 51.85 % 2,519 % September 51.85 2,519 October 54.99 % 2,575 % October 54.99 2,575 November 60.42 % 2,648 % November 60.42 2,648 December 62.55 % 2,674 % December 62.55 2,674 2018 January 68.22 % 2.824 % b. Given the holding-period retums computed in part a, what is the average return for Nike? % (Round to two decimal places.) Given the holding-period returns computed in part a, what is the average retum for the S&P 500 Index? % (Round to two decimal places.) Given the holding-period returns computed in part a, what is the standard deviation for Nike? % (Round to two decimal places.) Given the holding-period returns computed in part a, what is the standard deviation for the S&P 500 Index? % (Round to two decimal places.) ( c. The graphs below illustrate the relationship between the Nike stock returns shown on the vertical axis and the S&P 500 Index returns shown on the horizontal axis. Which of the following graphs correctly shows the characteristic line that best fits the monthly returns of the S&P 500 Index and Nike? (Note that you can click the magnifying glass button to enlarge the graphs.) (Select the best choice below.) OA OB. 20- 10- -5 10 -10 5 10 +10+ 10. .10 2012 -20 130 S&P 500 Index returns (%) -30 S&P 500 Index returns (%) OC. OD 30- Q a 20 20 a 16-- 22 10 . 10 -10 5 10 - -10 6 18 PE -10+ 20 FITNE S&P 500 Index returns (%) S&P 500 index returns (% d. From the graph you chose in part c, which of the following statements best describes the nature of the relationship between Nike stock returns and the returns for the S&P 500 Index? (Select the best cha below.) O A. Nike returns are negatively correlated to the S&P 500 Index returns. When the stock market rises, Nike's stock will fall. OB. Nike returns are positively correlated to the S&P 500 Index returns. When the stock market rises, Nike's stock will usually rise. OC. Nike returns are perfectly negatively correlated to the S&P 500 Index returns. When the stock market rises 1 percent, Nike's stock will fall exactly 1%. OD. Nike returns are uncorrelated to the S&P 500 Index returns. When the stock market rises, nothing will happen to Nike's stock. 1: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) ) NIKE S&P 500 INDEX 2017 January February March April May May June July July August September October November December 2018 January Ula $52.90 57.16 55.73 55.41 52.99 59.00 59.05 52.81 51.85 $2,279 2,364 2,363 2,384 2,412 2,423 411 2,470 2,472 2,519 2,575 2,648 2,674 54.99 60.42 62.55 68.22 2,824 7. (Expected return, standard deviation, and capital asset pricing model) The following are the end-of-month prices for both the Standard & Poor's 500 Index and Nike's common stock. a. Using the data in the popup window, calculate the holding-period returns for each of the months. b. Calculate the average monthly return and the standard deviation for both the S&P 500 and Nike. c. Develop a graph that shows the relationship between the Nike stock returns and the S&P 500 Index. (Show the Nike returns on the vertical axis and the S&P 500 Index returns on the horizontal axis.) d. From your graph, describe the nature of the relationship between Nike stock returns and the returns for the S&P 500 Index. a. Using the data in the table, calculate the holding-period returns for each of the months for both the Standard & Poor's 500 Index and Nike's common stock and fill in the blanks below. (Round to two decimal places.) S&P 500 NIKE S&P 500 NIKE RETURN INDEX RETURN 2017 January $52.90 $2,279 February 57.16 2,364 % February 57.16 2,364 March 55.73 % 2,363 % March 55.73 2,363 April 55.41 % 2,384 % April 55.41 2,384 May 52.99 % 2,412 % May 52.99 2,412 June 59.00 % 2,423 % June 59.00 2,423 July 59.05 % 2,470 % July 59.05 2,470 August 52.81 % 2,472 % August 52.81 2,472 September 51.85 % 2,519 % September 51.85 2,519 October 54.99 % 2,575 % October 54.99 2,575 November 60.42 % 2,648 % November 60.42 2,648 December 62.55 % 2,674 % December 62.55 2,674 2018 January 68.22 % 2.824 % b. Given the holding-period retums computed in part a, what is the average return for Nike? % (Round to two decimal places.) Given the holding-period returns computed in part a, what is the average retum for the S&P 500 Index? % (Round to two decimal places.) Given the holding-period returns computed in part a, what is the standard deviation for Nike? % (Round to two decimal places.) Given the holding-period returns computed in part a, what is the standard deviation for the S&P 500 Index? % (Round to two decimal places.) ( c. The graphs below illustrate the relationship between the Nike stock returns shown on the vertical axis and the S&P 500 Index returns shown on the horizontal axis. Which of the following graphs correctly shows the characteristic line that best fits the monthly returns of the S&P 500 Index and Nike? (Note that you can click the magnifying glass button to enlarge the graphs.) (Select the best choice below.) OA OB. 20- 10- -5 10 -10 5 10 +10+ 10. .10 2012 -20 130 S&P 500 Index returns (%) -30 S&P 500 Index returns (%) OC. OD 30- Q a 20 20 a 16-- 22 10 . 10 -10 5 10 - -10 6 18 PE -10+ 20 FITNE S&P 500 Index returns (%) S&P 500 index returns (% d. From the graph you chose in part c, which of the following statements best describes the nature of the relationship between Nike stock returns and the returns for the S&P 500 Index? (Select the best cha below.) O A. Nike returns are negatively correlated to the S&P 500 Index returns. When the stock market rises, Nike's stock will fall. OB. Nike returns are positively correlated to the S&P 500 Index returns. When the stock market rises, Nike's stock will usually rise. OC. Nike returns are perfectly negatively correlated to the S&P 500 Index returns. When the stock market rises 1 percent, Nike's stock will fall exactly 1%. OD. Nike returns are uncorrelated to the S&P 500 Index returns. When the stock market rises, nothing will happen to Nike's stock. 1: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) ) NIKE S&P 500 INDEX 2017 January February March April May May June July July August September October November December 2018 January Ula $52.90 57.16 55.73 55.41 52.99 59.00 59.05 52.81 51.85 $2,279 2,364 2,363 2,384 2,412 2,423 411 2,470 2,472 2,519 2,575 2,648 2,674 54.99 60.42 62.55 68.22 2,824