Question: The table shows the return over a 6 month period for the market and for the stock XYZ itd. Month Market Return XYZ LTD stock
The table shows the return over a 6 month period for the market and for the stock XYZ itd.
Month | Market Return | XYZ LTD stock return |
1 | -0.08 | -0.11 |
2 | 0.05 | 0.07 |
3 | 0.11 | 0.15 |
4 | -0.06 | -0.09 |
5 | 0.08 | 0.02 |
6 | 0.03 | 0.05 |
1. Using historical return, calculate the expected return and standard deviation of XYZ and the market
2. Which one is a better investment based on expected return and risk alone?
3. If the correlation between XYZ and the market is 0.935 what is the beta of the market? What is beta of XYZ ltd?
4. Risk can be measured by the standard deviation and beta, explain the differences between these two measures. Explains the differences between beta and standard deviation.
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