Question: The following table lists the stock prices for Microsoft from 1989 to 1998. The company did not pay any dividends during the period Year Price

The following table lists the stock prices for Microsoft from 1989 to 1998. The company did not pay any dividends during the period

Year     Price (dollars)

1989 .......... 1.20

1990 .......... 2.09

1991 .......... 4.64

1992 .......... 5.34

1993 .......... 5.05

1994 .......... 7.64

1995 .......... 10.97

1996 .......... 20.66

1997 .......... 32.31

1998 .......... 69.34

a. Estimate the average annual return you would have made on your investment.

b. Estimate the standard deviation and variance in annual returns.

c. If you were investing in Microsoft today, would you expect the historical standard deviations and variances to continue to hold? Why or why not?

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Annual Year Price Return 1989 12 1990 209 0741667 1991 464 1220096 1992 534 0150862 1993 505 00543... View full answer

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