7. For this exercise, you will have to download data on equity returns from 1926 to 2019 from Kenneth French's Data library (http://mba.tuck.dartmouth.edu/pages/ faculty/ken.french/data_library.html). You will download data on the excess returns of stocks over T-bills; they are available near the top of the page under Fama/French 3 Factors. You need the variable Mkt-RF. The variable is available at 4 different frequencies: annual, monthly, weekly and daily. (a) Compute the mean and standard deviation of stock returns at different frequen- cies, including their standard errors. To make results comparable, express every- thing in an annual frequency. To a first order, this means multiplying monthly returns by 12, weekly returns by 52, and daily returns by 250 (there are approxi- mately 250 trading days in a year). Compare your estimate of the mean and standard deviation (of annualized re- turns) across these different frequencies. How does the precision of your estimates (the tightness of confidence intervals change?). Discuss. (b) For each decade, compute the mean return in the stock market, and volatility. You can use monthly data for this exercise. Do your estimates of the mean and volatility vary across decades? Are your estimates statistically different? () For this part, we will only use daily returns. For each year in the sample, compute the realized volatility (i.e. standard deviation) of daily market returns. Plot the resulting yearly observations. Is market volatility constant over time? For this exercise, we will need a software package that allows you to estimate means and standard deviations, along with confidence intervals. If the software you use does not provide you with standard errors, you can consult your statistics textbook (or Wikipedia) and you can compute them manually. 7. For this exercise, you will have to download data on equity returns from 1926 to 2019 from Kenneth French's Data library (http://mba.tuck.dartmouth.edu/pages/ faculty/ken.french/data_library.html). You will download data on the excess returns of stocks over T-bills; they are available near the top of the page under Fama/French 3 Factors. You need the variable Mkt-RF. The variable is available at 4 different frequencies: annual, monthly, weekly and daily. (a) Compute the mean and standard deviation of stock returns at different frequen- cies, including their standard errors. To make results comparable, express every- thing in an annual frequency. To a first order, this means multiplying monthly returns by 12, weekly returns by 52, and daily returns by 250 (there are approxi- mately 250 trading days in a year). Compare your estimate of the mean and standard deviation (of annualized re- turns) across these different frequencies. How does the precision of your estimates (the tightness of confidence intervals change?). Discuss. (b) For each decade, compute the mean return in the stock market, and volatility. You can use monthly data for this exercise. Do your estimates of the mean and volatility vary across decades? Are your estimates statistically different? () For this part, we will only use daily returns. For each year in the sample, compute the realized volatility (i.e. standard deviation) of daily market returns. Plot the resulting yearly observations. Is market volatility constant over time? For this exercise, we will need a software package that allows you to estimate means and standard deviations, along with confidence intervals. If the software you use does not provide you with standard errors, you can consult your statistics textbook (or Wikipedia) and you can compute them manually