You have been following the prices of SMU Dawg and recording the following information:

* Remember to show all of your work *

a. Using the adjusted close, calculate the ex-post returns for SMU Dawg for each period. 

b. Calculated the arithmetic mean for stock A. 

c. Calculate the geometric mean for stock A.  

d. Calculate the standard deviation or the risk associated with stock A. 

e. Based upon your calculations, what do you think the expected price will be on August 1 and what assumptions did you make to arrive at this expected price? 

f.     What form of market efficiency did you use to calculate the expected price? Explain. 

g.    You were listening to the news at supper time and you heard a report of a pending new product that SMU Dawg will introduce to the market next week that will change the company’s product offering.  Will this information have a potential of changing your estimate that you provided in part e? Explain. 

h.    What form of market efficiency did you incorporate in part g? Explain. 

i.     If the market is strong form efficient, would your expected price estimate change? Explain 

Transcribed Image Text:

Adj Date Open High Low Close Dividend Volume Close* 01-Jul-21 62.50 62.50 61.35 61.75 61.75 0.625 27,454,900 01-Jun-21 62.90 64.35 61.32 61.90 61.28 35,919,800 01-May-21 63.37 64.69 61.33 62.71 62.09 31,563,300 01-Apr-21 61.61 64.40 60.78 63.38 62.75 0.625 28,179,500 01-Mar-21 61.41 62.80 60.54 61.37 60.15 43,585,500 01-Feb-21 61.55 62.88 60.35 61.06 59.85 34,410,600 01-Jan-21 60.83 65.24 60.28 61.39 60.17 1.130 30,801,200 01-Dec-20 61.00 62.84 58.12 60.54 58.25 35,638,500 01-Nov-20 60.91 61.73 57.36 60.33 58.05 58,022,600 01-Oct-20 62.52 63.00 60.11 60.72 58.42 0.565 21,743,700 01-Sep-20 59.51 63.41 58.98 62.31 59.41 0.565 30,764,200 01-Aug-20 60.09 62.44 58.76 59.47 56.17 30,263,900 01-Jul-20 59.06 61.44 58.15 60.54 57.18 43,506,900 Adj Date Open High Low Close Dividend Volume Close* 01-Jul-21 62.50 62.50 61.35 61.75 61.75 0.625 27,454,900 01-Jun-21 62.90 64.35 61.32 61.90 61.28 35,919,800 01-May-21 63.37 64.69 61.33 62.71 62.09 31,563,300 01-Apr-21 61.61 64.40 60.78 63.38 62.75 0.625 28,179,500 01-Mar-21 61.41 62.80 60.54 61.37 60.15 43,585,500 01-Feb-21 61.55 62.88 60.35 61.06 59.85 34,410,600 01-Jan-21 60.83 65.24 60.28 61.39 60.17 1.130 30,801,200 01-Dec-20 61.00 62.84 58.12 60.54 58.25 35,638,500 01-Nov-20 60.91 61.73 57.36 60.33 58.05 58,022,600 01-Oct-20 62.52 63.00 60.11 60.72 58.42 0.565 21,743,700 01-Sep-20 59.51 63.41 58.98 62.31 59.41 0.565 30,764,200 01-Aug-20 60.09 62.44 58.76 59.47 56.17 30,263,900 01-Jul-20 59.06 61.44 58.15 60.54 57.18 43,506,900

Answer rating: 100% (QA)

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