The following are the end-of-month prices for both Hong Kong’s Hang Seng Index and Sun Hung Kai Properties Ltd.’s common stock.

a. Using the data here, calculate the holding-period returns for each of the months.

b. Calculate the average monthly return and the standard deviation for both the Hang Seng Index and Sun Hung Kai Properties Ltd.

c. Develop a graph that shows the relationship between the Sun Hung Kai stock returns and the Hang Seng Index.
(Show the Sun Hung Kai returns on the vertical axis and the Hang Seng Index returns on the horizontal axis as done in Figure 6-5 .)

d. From your graph, describe the nature of the relationship between Sun Hung Kai stock returns and the returns for the Hang Seng Index.

Transcribed Image Text:

2018 SUN HUNG KAI HANG SENG PROPERTIES LTD. INDEX January HK $130.70 HK $30,844.72 February 124.00 30,093.38 March 126.80 30,808.45 April 126.60 30,468.56 May 118.40 28,955.11 June 123.00 28,583.01 July 116.50 27,888.55 August 114.00 27,788.52 September 101.90 24,979.69 October 111.50 26,506.75 November 111.60 25,845.70 December 131.20 27,942.47