Using the data in Table 10.2,
a. What was the average annual return of Microsoft stock from 2002€“2011?
b. What was the annual volatility for Microsoft stock from2002€“2011?

Transcribed Image Text:

TABLE 10.2 Realized Retum for the SaP 500, Microsoft,and TreasuryBill, 2002-20m Realized Return for the S&P 500, Microsoft, and Treasury Bills, 2002-2011 S&P 500 Index 1148.08 879.82 1111.92 1211.92 1248.29 1418.30 1468.36 903.25 1115.10 1257.64 1257.60 S&P 500 Realized Return Microsoft Realized Return 1-Month T-Bill Return Year End Paid 2001 14.53 20.80 20.98 23.15 27.16 27.86 21.85 27.19 25.44 26.59 -22.0% 6.8% 8.9% -0.9% 15.8% 20.8% -44.4% 60.5% -6.5% -4.5% 1.6% 1.0% 1.2% 3.0% 2004 2005 2006 2007 2008 2009 2010 2011 -22.1% 28.7% 10.9% 4.9% 15.896 5.5% -37.0% 26.5% 15.1% 2.19% 1.5% 0.1% 0.1% 0.0% Total dividends paid by the 500 stocks in the potfolio, based on the number of shares of each stock in the index, adjusted until the end of the year, assuming they were reinvested when paid Source: Scandard&Poor's, Microsoft and U.S. Treasury Data