Question
Compute daily percentage price changes for TSLA, the S&P 500 and the EUR/USD as follows: rt+t=Pt+tPtPt, where rt denotes a daily rate of return for
Compute daily percentage price changes for TSLA, the S&P 500 and the EUR/USD as follows:
rt+t=Pt+tPtPt,
where rt denotes a daily rate of return for each asset, and Pt denotes the closing price for the same.
Using the Excel function STDEV.S, compute the standard deviation of daily returns for each asset. This number represents an estimate of the volatility per day. In order to obtain an annualized figure, you need to multiply it by 252, that is:
annualized=252daily.
Briefly discuss the differences in magnitude of the annualized volatility among the different assets.
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