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Stock Volatility: Investors will commonly discuss volatility in stocks, which is closely related to the variance in the stock return, or price. Using the Weekly
Stock Volatility: Investors will commonly discuss volatility in stocks, which is closely related to the variance in the stock return, or price. Using the Weekly data, lets explore whether returns in year the year that The Great Recession began, contained greater volatility than in returns in year a year where the stock market was still on a relatively climb up to the peak reached in late
a What needs to be done to accomplish our goal?
b Create a filtered dataset from Weekly that contains only information we are interested in
c Using the filtered dataset, create visualizations summarizing of the distribution of the difference in volatility variance between the two years in this data. The quantity of interest is a Random Variable and would be written s s in mathematical terms. It may be helpful to create two datasets, Weekly and Weekly which contain only weekly returns from the specified years, and then
sample with replacement within each of these datasets manytimes think bootstrapping in order to create a sample of differences in variance volatility
d Estimate the standard error of the difference in volatility variance between years and in the Weekly data. This would be written s s in mathematical terms.
e Provide some evidence for or against the argument that was a more volatile year than Make sure to use resampling or statistical methods to make this argument. Your answer should be in the form of a confidence interval
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