Question

You are to calculate the mean and standard deviation for the rate of returns for IBM and GE. Use monthly values for the period August 1, 2007 through August 1, 2018

Q10.You are to calculate the mean and standard deviation for the rate of returns for IBM and GE. Use monthly values for the periodAugust 1, 2007 through August 1, 2018. Data can be obtained from the WWW as follows 1.Go to http:www.yahoo.com. Select the Finance option 2.Enter your stock's symbol (IBM and GE) one by one.3.Under the Summary tab select "Historical Data" 4.Enter the dates correctly under the ‘set date range’ for the selected stock.Make sure the time period covered is IBM and GE(August 1, 2007 through August 1, 2018). 5.Select “Historic Prices and select correct frequency (in this case monthly)”. Further,click on “Apply” tab.6.Then just belowApply tab is download the spreadsheet. Download the spreadsheet as an excel file and save it.7.Delete all the columns except“Date” and “Adjusted close” columnsfor all three stocks.Keep only one column of “Date”.8.Make sure the data is in ascending order (by date) (i.e. old date on the top and most recent date on the bottom of the “Date” column).9.Calculate the Rate ofReturns (Xt -Xt-1 ) / Xt-1for all three stocks.

Answer 1

As per the question, I have collected data for adjusted closing for two stocks namely, IBM nad GE for the period of 1/9/2017 to 1/9/2018. Then I have calculated Rate of Return for both the stocks by using the formula: (x_t-x_t-1)/x_t-1 and then just have calculated the mean and standard deviation value of both the stocks rate of return by using excel function: "AVERAGE" and "STDDEV". As there is no option to upload the excel file, I am uploading the snapshot of it. The snapshot is consisting with the mean and standard deviation value.

Snapshot for the IBM stock:

Snapshot for GE stock

Adj Close Rate of return 1 Date 2 9/1/2007 87.909332 3 10/1/2007 86.655579 0.014261887 Mean 4 11/1/2007 78.4915310.094212607 Standard Deviation 0.052948 0.005291 5 12/1/2007 80.956703 0.031406853 6 1/1/2008 80.2153240.009157722 7 2/1/2008 85.27047 0.063019704 8 3/1/2008 86.558723 0.015107844 9 4/1/2008 90.7385710.04828916 10 5/1/2008 97.301498 0.072327864 11 6/1/2008 89.4714660.080471855 12 7/1/2008 96.604729 0.079726681 13 8/1/2008 91.886955 -0.048835849 14 9/1/2008 88.6302340.035442692 15 10/1/2008 70.451050.205112671 16 11/1/200861.835052 0.122297652 17 12/1/2008 64.131485 0.037138046 18 1/1/2009 69.839027 0.088997503 19 2/1/2009 70.128571 0.004145877 20 3/1/2009 74.233658 0.058536584 21 4/1/2009 795798 0.065228363 22 5/1/2009 81.42794 0.02974541 23 6/1/2009 80.420708 -0.012369612 24 7/1/2009 90.825699 0.129381987 25 8/1/2009 90.918106 0.00101741