Steps to Follow:

1. Go to the Yahoo! Finance website, search for Apple Inc. (AAPL), and choose the link for "Historical Data"

Set the Time Period to Dec 31, 2019 to Dec 31, 2020, set the Frequency to Daily, and click on the "Apply" button

Choose the link to "Download Data", open the spreadsheet, and copy the data into the space below

2. Calculate continuously compounded returns for each daily interval, using the function LN(Today's Adj Close / Yesterday's Adj Close)

3. Calculate the standard deviation of the returns, using the function STDEV across all returns

4. Estimate the annualized historical volatility, by multiplying the standard deviation of daily returns by the square root of the number of trading days in a year (252)

5. Estimate the annualized historical volatility for the last 3 months of the year only, by combining Steps 3 and 4 and applying them to the relevant returns

Which estimated annualized historical volatility is greater: that for the entire year, or that for the last quarter?

What is the most likely explanation for your previous answer?

A. Uncertainty related to Apple stock prices decreased during the last quarter of the year

B. Uncertainty related to Apple stock prices increased during the last quarter of the year

C. The Federal Reserve increased interest rates throughout the year

D. Emerging market stock prices changed significantly during the last quarter of the year

Choose the answer that you think is best.

Please make formulas visible.