Question

In: Finance

1 - Please use 3 years monthly return data from Apple stock to find the arithmetic...

1 - Please use 3 years monthly return data from Apple stock to find the arithmetic and geometric average rate of return of this stock, total risk of this stock, and the normal distribution of this stock returns.

2 - Based on the beta information, please use an appropriate model to decide if this stock is overpriced or underpriced. You can take 3 years average rate of return as the expected rate of return, the 3 years average rate of return on S&P 500 index as the market return, and the 3 years average Treasury note rate of return as the risk free rate.

Solutions

Expert Solution

Date Open Close RETURNS Market return on S&P500(3 years)
01-11-2017 42.4675 42.962502 0.011656 0.000631047
01-12-2017 42.4875 42.307499 -0.00424 0.010778423
01-01-2018 42.54 41.857498 -0.01604 0.052196041
01-02-2018 41.7925 44.529999 0.065502 -0.036435894
01-03-2018 44.635 41.945 -0.06027 -0.027382626
01-04-2018 41.66 41.314999 -0.00828 0.005544095 Variance(apple) Covariance(apple,s&p500)
01-05-2018 41.6025 46.717499 0.122949 0.023575862 0.009599527 0.003955973
01-06-2018 46.9975 46.2775 -0.01532 -0.00012132 Beta(apple) 0.412100781
01-07-2018 45.955 47.572498 0.035197 0.041161607
01-08-2018 49.7825 56.907501 0.143123 0.028481127
01-09-2018 57.1025 56.435001 -0.01169 0.005875131
01-10-2018 56.9875 54.715 -0.03988 -0.073318108
01-11-2018 54.7625 44.645 -0.18475 0.015671974
01-12-2018 46.115 39.435001 -0.14486 -0.101648415
01-01-2019 38.7225 41.610001 0.074569 0.091701174
01-02-2019 41.74 43.287498 0.037075 0.030407176
01-03-2019 43.57 47.487499 0.089913 0.012929624
01-04-2019 47.91 50.1675 0.04712 0.034121735
01-05-2019 52.47 43.767502 -0.16586 -0.067834562
01-06-2019 43.9 49.48 0.127107 0.069136073
01-07-2019 50.7925 53.259998 0.04858 0.003018759
01-08-2019 53.475 52.185001 -0.02412 -0.01807192
01-09-2019 51.6075 55.9925 0.084968 0.023282828
01-10-2019 56.2675 62.189999 0.105256 0.018054865
01-11-2019 62.385 66.8125 0.070971 0.029586462
01-12-2019 66.8175 73.412498 0.098702 0.027650788
01-01-2020 74.06 77.377502 0.044795 -0.005901957
01-02-2020 76.075 68.339996 -0.10168 -0.086980693
01-03-2020 70.57 63.572498 -0.09916 -0.131019923
01-04-2020 61.625 73.449997 0.191886 0.165867323
01-05-2020 71.5625 79.485001 0.110707 0.061071617
01-06-2020 79.4375 91.199997 0.148072 0.020241679
01-07-2020 91.28 106.260002 0.16411 0.053188813
01-08-2020 108.2 129.039993 0.192606 0.064487008
01-09-2020 132.76 115.809998 -0.12767 -0.041181016
01-10-2020 117.64 115.980003 -0.01411 0.012123857
20-10-2020 116.2 117.592499 0.011984 0.001087473
Arithmatic 2.73%
Geometric -5.62%

Related Solutions

Consider the following five monthly returns. The arithmetic average monthly return over this period is 3.40​%...
Consider the following five monthly returns. The arithmetic average monthly return over this period is 3.40​% and the geometric average monthly return over this period is 3.30​%. Explain the difference between the arithmetic average return and the geometric average return. Are both numbers​ useful? If​ so, explain​ why? 6​% negative 3​% 7​% 8​% negative 1​% Choose the correct answer below. A. The arithmetic average return is the best estimate of what you would earn in the​ future, so this is...
Calculate annual arithmetic rate of return and annual geometric rate of return of stock A and...
Calculate annual arithmetic rate of return and annual geometric rate of return of stock A and B. Consider the data in table below, which show the movements in price for two stocks over two successive holding periods. Both stocks have a beginning price of $10. Stock A rises to $40 in period 1 and then declines to $30 in period 2. Stock B falls to $8 in period 1 and then rises to $25 in period 2.
Question #: Lebron James contains the monthly return data for Microsoft (MSFT), IBM (IBM), Apple (AAPL)...
Question #: Lebron James contains the monthly return data for Microsoft (MSFT), IBM (IBM), Apple (AAPL) and Hewlett-Packard (HPQ) for the period 2007/1- 2016/12. Month MSFT IBM AAPL HPQ 20070131 0.033490 0.020587 0.010490 0.050740 20070228 -0.083927 -0.059607 -0.013064 -0.090804 20070330 -0.010650 0.014203 0.098097 0.022109 20070430 0.074273 0.084341 0.074158 0.049826 20070531 0.028393 0.046864 0.214339 0.084718 20070629 -0.039756 -0.012664 0.007005 -0.022096 20070731 -0.016288 0.051306 0.079646 0.031600 20070831 -0.005519 0.058202 0.051002 0.072127 20070928 0.025409 0.009512 0.108247 0.010537 20071031 0.249491 -0.014261 0.237701 0.037959 20071130...
Use the following data to explore the risk-return relation and the concept of beta for Apple...
Use the following data to explore the risk-return relation and the concept of beta for Apple stock, Alphabet (Google) stock, and the S&P 500 market index: Year Apple Stock Price Alphabet Stock Price S&P 500 Market Index 2017 $174.09 $1,072.01 2,601.42 2016 $115.82 $807.80 2,238.83 2015 $105.26              $765.84 2,043.94 2014 $113.99 $521.51 2,058.90 2013 $80.01 $559.76 1,848.36 2012 $72.80 $358.17 1,426.19 Market risk premium: RPM = 4.01% Risk-free rate: rRF = 1.30% Calculate the portfolio beta of the four-stock portfolio...
Use the following data to explore the risk-return relation and the concept of beta for Apple...
Use the following data to explore the risk-return relation and the concept of beta for Apple stock, Alphabet (Google) stock, and the S&P 500 market index: Year Apple Stock Price Alphabet Stock Price S&P 500 Market Index 2017 $174.09 $1,072.01 2,601.42 2016 $115.82 $807.80 2,238.83 2015 $105.26              $765.84 2,043.94 2014 $113.99 $521.51 2,058.90 2013 $80.01 $559.76 1,848.36 2012 $72.80 $358.17 1,426.19 E) Calculate the expected return on the market according to: Expected Return on Market = Risk-Free Rate + Market...
1. The stock price of Apple is $106. You have $10,000 to invest. The monthly interest...
1. The stock price of Apple is $106. You have $10,000 to invest. The monthly interest rate is 0.5%. a. You think the stock price will go up soon, and want to trade 120 shares. What should you do? Enter 120 for buying 120 shares (on margin if necessary), or -120 for selling or short-selling 120 shares. b. What is your initial percentage margin (entered as a decimal number)? c. Two months later, the stock price is $126. What is...
5. Find the sum of terms in given arithmetic sequence 1 + 3 + 5 +...
5. Find the sum of terms in given arithmetic sequence 1 + 3 + 5 + ... + 59 6. Find the sum of terms in given arithmetic sequence 2 + 5 + 8 + ... + 41 7.Given a geometric sequence 6 + 2 + 2/3 + ... is this sequence converging or diverging, if it is converging find it's sum
Is it possible for a stock to have positive arithmetic average rate of return but lose...
Is it possible for a stock to have positive arithmetic average rate of return but lose money overall? • If your answer is yes, please give a concrete numerical example (e.g. first period return = .., second period return = ..., etc.). • If your answer is no, please explain why
how to Calculate monthly stock return volatility and monthly turnover ? How return volatility is associated...
how to Calculate monthly stock return volatility and monthly turnover ? How return volatility is associated with turnover? Suppose in early January 2018 you start investing in one (and only one) of the two stocks and sell in 3 months, which stock you choose?
(Calculating the geometric and arithmetic average rate of​ return)  The common stock of the Brangus Cattle...
(Calculating the geometric and arithmetic average rate of​ return)  The common stock of the Brangus Cattle Company had the following​ end-of-year stock prices over the last five years and paid no cash​ dividends: Time Brangus cattle Comapny 1 ​$1313 2 99 3 1111 4 2323 5 2929 a.  Calculate the annual rate of return for each year from the above information. b.  What is the arithmetic average rate of return earned by investing in Brangus Cattle​ Company's stock over this​...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT