Week $8-$ Stocks, Chapter $10$

Your work must be computer typed. Handwritten work will not be accepted. Your answer must show work!

Exercise $7$

A fund had the following annual prices and dividends $($beginning of the year$)$:

$\backslash$table$[[2018,2019,2020,{2021}^{**},2022,2023],[$$$40,45,52,30,34,31],[,$$$1,1,\mathrm{.}60,\mathrm{.}60,\mathrm{.}60]]$

Price reflects a two for one split.

a$.$ Compute each year return.

b$.$ Compute the five years holding period return.

c$.$ Compute the annualized rate of return

The Millennium Falcon Company Inc. had the following six years returns: $20\%,10\%,-10\%,13\%,$ and $32\%.$ Compute MF$\text{'}$s stock average return, variance and standard deviation.

At the same years the market index performance was $17\%,5\%,-7\%,3\%,$ and $7\%.$ Calculate the index average return, standard deviation and the Millennium Falcon a covariance and correlation with the market index.

Obtain the last five years $($ending on December $31,2023)$ of weekly stock prices for symbols SPY $($S&P$500$ tracking stock$)$ and SHY $($short government bonds index tracking stock$)$ and two other stocks of your choice $($pick large companies, for example Dow Jones Industrial Average components$).$ In Excel, using the prices adjusted for dividends compute the stock weekly returns. A$.$ Using Excel function $($Average$(..),$ VAR.S$(..),$ STDEV.S$(...))$ report on a separate sheet report the weekly average return, variance and standard deviation.

b$.$ For each stock create a Histogram $($make the histogram with at least $20$ or more bins $($make the same bins for all securities$,$ make sure the bin wide enough for all securities$.$ If you make all bins the same, the histogram will show risk very clearly$).$ Compare and briefly discuss the results for SPY and SHY. Your work should be like the one on the following page. Submit your Excel file.

$1$