Question
The price of share A will change from January to July as follows: $100 (January price), $105 (February price, etc.), $109, 115, 114, 99 and
The price of share A will change from January to July as follows: $100 (January price), $105 (February price, etc.), $109, 115, 114, 99 and 55. A dividend of two dollars will be paid in May. In July, the share will be split so that one share becomes two. Calculate the simple net return. Calculate the continuously compounded return. Calculate the average simple net return. Do the same for continuously compounded returns. Finally, calculate the difference between the averages (the average of the simple net return - the average of the continuously compounded return).
1.What is the difference between the averages ?
2.Calculate the volatility and variance of the simple net return and continuously compounded return. When you add all four values together, what is the end result?
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