Question

Using the data shown in the table? here,

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?, that contains historical monthly prices and dividends? (paid at the end of the? month) for Ford Motor Company stock? (Ticker: F) from August 1994 to August? 1998, compute? the:

a. Average monthly return over this period.

b. Monthly volatility? (or standard? deviation) over this period.

c.? 95% confidence interval of the estimate of the average monthly return.

Date Stock Price Dividend Return 1+Rt

Aug-94 $29.250 $0.000

Sep-94 $27.750 $0.000 -5.13% 0.949

Oct-94 $29.500 $0.260 7.24% 1.072

Nov-94 $27.125 $0.000 -8.05% 0.919

Dec-94 $27.875 $0.000 2.76% 1.028

Jan-95 $25.250 $0.260 -8.48% 0.915

Feb-95 $26.125 $0.000 3.47% 1.035

Mar-95 $26.875 $0.000 2.87% 1.029

Apr-95 $27.125 $0.310 2.08% 1.021

May-95 $29.250 $0.000 7.83% 1.078

Jun-95 $29.750 $0.000 1.71% 1.017

Jul-95 $29.000 $0.310 -1.48% 0.985

Aug-95 $30.750 $0.000 6.03% 1.060

Sep-95 $31.125 $0.000 1.22% 1.012

Oct-95 $28.750 $0.350 -6.51% 0.935

Nov-95 $28.250 $0.000 -1.74% 0.983

Dec-95 $28.875 $0.000 2.21% 1.022

Jan-96 $29.500 $0.350 3.38% 1.034

Feb-96 $31.250 $0.000 5.93% 1.059

Mar-96 $34.375 $0.000 10.00% 1.100

Apr-96 $35.875 $0.350 5.38% 1.054

May-96 $36.500 $0.000 1.74% 1.017

Jun-96 $32.375 $0.000 -11.30% 0.887

Jul-96 $32.375 $0.385 1.19% 1.012

Aug-96 $33.500 $0.000 3.47% 1.035

Sep-96 $31.250 $0.000 -6.72% 0.933

Oct-96 $31.250 $0.385 1.23% 1.012

Nov-96 $32.750 $0.000 4.80% 1.048

Dec-96 $32.250 $0.000 -1.53% 0.985

Jan-97 $32.125 $0.385 0.81% 1.008

Feb-97 $32.875 $0.000 2.33% 1.023

Mar-97 $31.375 $0.000 -4.56% 0.954

Apr-97 $34.750 $0.420 12.10% 1.121

May-97 $37.500 $0.000 7.91% 1.079

Jun-97 $38.000 $0.000 1.33% 1.013

Jul-97 $40.875 $0.420 8.67% 1.087

Aug-97 $43.000 $0.000 5.20% 1.052

Sep-97 $45.125 $0.000 4.94% 1.049

Oct-97 $43.688 $0.420 -2.25% 0.977

Nov-97 $43.000 $0.000 -1.57% 0.984

Dec-97 $48.563 $0.000 12.94% 1.129

Jan-98 $51.000 $0.420 5.88% 1.059

Feb-98 $56.563 $0.000 10.91% 1.109

Mar-98 $64.813 $0.000 14.59% 1.146

Apr-98 $45.813 $23.680 7.22% 1.072

May-98 $51.875 $0.000 13.23% 1.132

Jun-98 $59.000 $0.000 13.73% 1.137

Jul-98 $57.000 $0.420 -2.68% 0.973

Aug-98 $44.625 $0.000 -21.71% 0.783

Answer 1

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