1. Calculate the daily standard deviation of returns for a stock using historical data for the past month. What insights can you gain from this calculation?

Here's a fictional dataset of daily closing prices for the past month for the stock of XYZ Inc.:

Day 1: $50.00

Day 2: $51.20

Day 3: $52.10

Day 4: $51.80

Day 5: $53.00

Day 6: $52.70

Day 7: $52.50

Day 8: $51.90

Day 9: $50.80

Day 10: $50.40

Day 11: $50.60

Day 12: $51.20

Day 13: $51.80

Day 14: $51.40

Day 15: $51.70

Day 16: $51.90

Day 17: $52.20

Day 18: $53.40

Day 19: $54.00

Day 20: $53.80

Day 21: $54.10

Day 22: $54.50

Day 23: $54.30

Day 24: $54.60

Day 25: $54.70

Day 26: $54.20

Day 27: $54.40

Day 28: $53.80

Day 29: $53.50

Day 30: $53.70

1. Let's consider a fictional stock, XYZ Inc., with the following characteristics:

Current Stock Price: $100 per share

Option Expiration Date: One month from today

Strike Price for CALL Option: $105 per share

Strike Price for PUT Option: $95 per share

Risk-Free Interest Rate: 2% per annum

Daily Volatility of Stock Returns: 1% (daily standard deviation)

What insights can you gain from this calculation?

Answer rating: 100% (QA)

To calculate the daily standard deviation of returns for the stock using historical data for the past month we can use the provided dataset Heres the ... View the full answer