Question

An MBA (Master of Business Administration) student decides to see if he can predict the Standard and Poor's Toronto Stock Exchange Composite Index from the price of one or more share prices of Canadian companies.
a. The student collects monthly historical price data (November 2002 to November 2008) for stocks from some important Canadian sectors:
• Rona Incorporated, the largest Canadian distributor and retailer of hardware, home renovation, and gardening products
• Royal Bank of Canada, a major Canadian bank
• Petro Canada, a Canadian oil and gas company with international interests
• Potash Corporation of Saskatchewan, an integrated producer of fertilizer, industrial, and animal feed products Do any of these stocks (or a combination of these stocks) provide a good predictor of the TXS Composite Index?
b. During the fall of 2008, the world economy experienced an unprecedented crisis and stock markets around the world gyrated wildly. Is there evidence of this in the data you examined in part a of this question? Would it be wise to try to build a model to predict the TSX Composite Index using data from this period? Explain.


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  • CreatedJuly 12, 2015
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