# Question: This exercise considers daily percentage changes in stock of Disney

This exercise considers daily percentage changes in stock of Disney during 2010 and 2011. Use the same data as in Exercise 53.

(a) Describe the shape and any key features of the histogram.

(b) Find the mean and standard deviation of the percentage changes. Use the properties of these data to define a random variable that is the percentage change in Disney stock in a future day.

(c) If the interest cost for a daily investment in Disney is 2 basis points (i.e., 0.02% per day), find the Sharpe ratio for a daily investment of $1,000 in this stock.

(d) Does the Sharpe ratio indicate whether the investor is better off with more money or less money invested in Disney? That is, can an investor use the Sharpe ratio to decide whether to invest $1,000, $5,000, or $10,000 in Disney?

(e) How does the Sharpe ratio for Disney compare to that for Microsoft during these two years

(f) If an investor compares the Sharpe ratio for Disney to that for Microsoft to decide which investment is better, then what assumptions about future returns are being made?

(a) Describe the shape and any key features of the histogram.

(b) Find the mean and standard deviation of the percentage changes. Use the properties of these data to define a random variable that is the percentage change in Disney stock in a future day.

(c) If the interest cost for a daily investment in Disney is 2 basis points (i.e., 0.02% per day), find the Sharpe ratio for a daily investment of $1,000 in this stock.

(d) Does the Sharpe ratio indicate whether the investor is better off with more money or less money invested in Disney? That is, can an investor use the Sharpe ratio to decide whether to invest $1,000, $5,000, or $10,000 in Disney?

(e) How does the Sharpe ratio for Disney compare to that for Microsoft during these two years

(f) If an investor compares the Sharpe ratio for Disney to that for Microsoft to decide which investment is better, then what assumptions about future returns are being made?

## Answer to relevant Questions

A construction company manages two large building projects. Both require about 50 employees with comparable skills. At a meeting, the site managers from the two projects got together to estimate the labor needs of their ...1. On average, retailers expect to sell the same amount on the first weekend and the second weekend. 2. If retail sales are exceptionally low on the first weekend, retailers expect lower than average sales on the following ...Repeat the calculations of Exercise 33. Rather than treat the random variables X and Y as independent, assume that Cov(X, Y) = 12,500. During the 2010-2011 NBA season, LeBron James of the Miami Heat attempted 279 three-point baskets and made 92. He also attempted 1,485 two-point baskets, making 758 of these. Use these counts to determine probabilities for ...1. Expression for the variance of Y 2. Probability that the first trial B1 fails. 3. Expression for the mean of X 4. Probability that Y is zero 5. Probability that X is 2 6. Covariance between B1 and B2 7. Expression for the ...Post your question