Questions 7-9

Compute monthly S&P 500 index returns. To calculate monthly returns using S&500 index

price, you need to use formula as Rt = PtPt1 where t represents time (In our case, t refers to Ptmonth; Pt represents the S&P index price at time t. For example, if you would like to compute areturnonFeb.,2000,youmay be able to specify an equation as RFeb,2000 = PFeb,2000PJan,2000PJ an,2000 Using monthly returns that you obtained from the previous problem, compute monthly cumula-

tive returns. To compute monthly cumulative returns, use the formula as CRt = Rt +t1 Rj j=1

where CRt represents a cumulative return at time t.

Plot monthly cumulative returns and examine how cumulative return series are affected by economic crisis. Also indicate bear or bull stages in the US stock market since the year of 2000.

Problem 7. Compute monthly S&P 500 index returns To calculate monthly returns using S&500 index price, you need to use formula as R = -where t represents time (In our case, t refers to Pt month: P represents the S&P index price at time t. For example, if you would like to compute a return on Feb., 2000, you may be able to specify an equation as R feb.2000 = Prab 2000-Pran.z2000 Ptan: 2000 Problem 8. Using monthly returns that you obtained from the previous problem, compute monthly cumula- tive returns. To compute monthly cumulative returns, use the formula as CR, = R1+=R where CR represents a cumulative return at time t Problem 9. Plot monthly cumulative returns and examine how cumulative return series are affected by economic crisis. Also indicate bear or bull stages in the US stock market since the year of 2000 Problem 7. Compute monthly S&P 500 index returns To calculate monthly returns using S&500 index price, you need to use formula as R = -where t represents time (In our case, t refers to Pt month: P represents the S&P index price at time t. For example, if you would like to compute a return on Feb., 2000, you may be able to specify an equation as R feb.2000 = Prab 2000-Pran.z2000 Ptan: 2000 Problem 8. Using monthly returns that you obtained from the previous problem, compute monthly cumula- tive returns. To compute monthly cumulative returns, use the formula as CR, = R1+=R where CR represents a cumulative return at time t Problem 9. Plot monthly cumulative returns and examine how cumulative return series are affected by economic crisis. Also indicate bear or bull stages in the US stock market since the year of 2000