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The return on a stock is the change in its market price plus any dividend payments made. Total return is usually expressed as a percent
The return on a stock is the change in its market price plus any dividend payments made. Total return is usually expressed as a percent of the beginning price. The figure above is a histogram of the distribution of the monthly returns for all stocks listed on the US markets from January to November months The extreme low outlier is the market crash of October when stocks lost of their value in one month. The other two outliers are during August a month when the Dow Jones Industrial Average experienced its second largest drop in history to that time, and the financial crisis in October when stocks lost of their value.
a Describe the overall shape of the distribution of the monthly returns.
b What is the approximate center of this distribution?
c Approximately what were the smallest and largest monthly returns, leaving out the outliers?
d A return less than zero means that stocks lost value in that month. About what
percent of all months had returns less than zero.
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