Question: [ 6 points total: 1 point for each part ] Consider weekly data on closing prices of the SP 5 0 0 index from 1
points total: point for each part Consider weekly data on closing prices of the SP index from to The data is in the attached Excel file.
a Generate a series of weekly rates of return. Then Compute the mean and the standard deviation of the weekly rates of return over the entire sample period, as well as the and confidence intervals. How many standard deviations away from the mean is the rate of return of the week ending on
b Plot a histogram of the weekly rates of return, with bins of equal size.
c Compute the arithmetic annual rate of return of the SP price. This is the so called annual percentage rate APR:
APR
where is the number of weeks in a year number of compounding periods in a year and week is the average weekly rate of return over the sample.
d Compute the geometric annual rate of return of the SP index. This is the so called effective annual rate EAR:
I EAR where
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