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How is question 3 completed Question 3 The return on a stock is the change in its market price plus any dividend payments made. Total

How is question 3 completed

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Question 3 The return on a stock is the change in its market price plus any dividend payments made. Total return is usually expressed as a percent of the beginning price. Below is a histogram of the distribution of the monthly returns for all stocks listed on U.S. markets from January 1985 to November 2010 (311 months). The extreme low outlier is the market crash of October 1987, when stocks lost 23% of their value in one month. The other two low outliers are 16% during August 1998, a month when the Dow Jones Industrial Average experienced its second largest drop in history to that time, and the financial crisis in October 2008 when stocks lost 17%% of Number of months 8 30 0 10 O -10 0 10 Monthly percent return on common stocks their value. (a). Ignoring the outliers, describe the fall shape of she distribution of monthly returns. (2 points) (b). What is the approximate center of this distribution? (For now, take the center to be the value with roughly half the months having lower returns and half having higher returns.) 2 points) (c). Approximately what were the smallest and margest monthly returns, leaving out the out- liers? (This is one way to describe the spread of the distribution.) (2 points) [ (d). A return less than zero means that stocks lost value in that month. About what percent of all months had returns less than zero? (2 points)

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