Using the data in Table 10.2, a. What was the average annual return of Microsoft stock from
Question:
a. What was the average annual return of Microsoft stock from 20022011?
b. What was the annual volatility for Microsoft stock from20022011?
TABLE 10.2 Realized Retum for the SaP 500, Microsoft,and TreasuryBill, 2002-20m Realized Return for the S&P 500, Microsoft, and Treasury Bills, 2002-2011 S&P 500 Index 1148.08 879.82 1111.92 1211.92 1248.29 1418.30 1468.36 903.25 1115.10 1257.64 1257.60 S&P 500 Realized Return Microsoft Realized Return 1-Month T-Bill Return Year End Paid 2001 14.53 20.80 20.98 23.15 27.16 27.86 21.85 27.19 25.44 26.59 -22.0% 6.8% 8.9% -0.9% 15.8% 20.8% -44.4% 60.5% -6.5% -4.5% 1.6% 1.0% 1.2% 3.0% 2004 2005 2006 2007 2008 2009 2010 2011 -22.1% 28.7% 10.9% 4.9% 15.896 5.5% -37.0% 26.5% 15.1% 2.19% 1.5% 0.1% 0.1% 0.0% Total dividends paid by the 500 stocks in the potfolio, based on the number of shares of each stock in the index, adjusted until the end of the year, assuming they were reinvested when paid Source: Scandard&Poor's, Microsoft and U.S. Treasury Data
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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