Question 1

Qesonl: Use Yahoo Finance to download daily closing prices for Microsoft and Google for Year 2020. a) Calculate the returns for each stock. Graph the histogram of daily returns. Do the returns follow the normal distribution very well? Does the histogram have heavy tails? b) Are daily returns for each stock independent? (an easy way is to graph the scatter plot of the retulns and make a visual inspection, you can also calculate the autocorrelation). c) Use File-1 (GBM) to simulate the weekly returns for year 2020. (Note, I have simulated the weekly prices of a stock with a mean of 10%, volatility of 30%, and initial price of 100)