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The historical monthly returns of Nvidia, a US-based chip designer, are shown as below: Month Returns Jan 2020 14.2% Feb 2020 -2.3% Mar 2020 10.9%
The historical monthly returns of Nvidia, a US-based chip designer, are shown as below: Month Returns Jan 2020 14.2% Feb 2020 -2.3% Mar 2020 10.9% Apr 2020 21.5% May 2020 7.0% June 2020 11.8% July 2020 25.8% a) Calculate the arithmetic average return and standard deviation of the return during th period. (5 marks b) Calculate the effective annual return (EAR) of the stock during the period. (2 marks c) Assuming the historical returns distribution will remain unchanged in the future. Explai whether you will buy the stock if you cannot tolerate there is more than 2.5% chance the the stock records -10% monthly return. Show your calculations. (3 marks
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