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Calculate the monthly return of the stocks of Amazon and Walmart, each, from Jan 4, 2010 to June 4, 2019. (Yahoo Finance prov

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Answer #1

For Walmart

Open High Low Close Adj Close Volume N= 2264
2/23/1900 54.369999 53.419998 53.450001 42.097328 9764800 Monthly Return (1+Monthly Return) Geometric Mean ((1+r1)(1+r2)…(1+rn))^(1/n)
2/22/1900 54.669998 53.669998 54.23 42.711647 20753100 0.014487376 1.014487376 1.905933426
2/23/1900 54.189999 53.57 53.689999 42.286343 15648400 -0.010007473 0.989992527 1.000284922
2/22/1900 53.830002 53.419998 53.57 42.191837 12517200 -0.002237407 0.997762593 0.000284922
2/22/1900 53.75 53.259998 53.599998 42.215462 10662700 0.000559786 1.000559786 0.028492215
2/22/1900 53.529999 53.02 53.330002 42.0028 11363200 -0.005050269 0.994949731 0.000285 Geometric Mean

For Amazon

Date Open High Low Close Adj Close Volume Monthly return (1+Monthly Return)
12/31/2009 137.089996 137.279999 134.520004 134.520004 134.520004 4523000
1/4/2010 136.25 136.610001 133.139999 133.899994 133.899994 7599900 -0.004619709 0.995380291 7.12197175
1/5/2010 133.429993 135.479996 131.809998 134.690002 134.690002 8851900 0.005882649 1.005882649 1.000867507
1/6/2010 134.600006 134.729996 131.649994 132.25 132.25 7178800 -0.018281786 0.981718214 0.086750708
1/7/2010 132.009995 132.320007 128.800003 130 130 11030200 -0.01715962 0.98284038 0.09% Monthly average mean
1/8/2010 130.559998 133.679993 129.029999 133.520004 133.520004 9830500 0.026716859 1.026716859

Monthly return from Walmart=0.0285%

Monthly return from Amazon=0.0865%

Dont confuse over the data of Amamzone we have chosen few sample ranges from Jan 2009 to 2019


Ans 1)

Expected Mean of alternative A)
=0.1(0.0865%)+0.9(0.0285%)
=0.0343%

SD of Return=((0.1(0.0865%)^2+0.9(0.0285%)^2-(0.0343%)^2)^(0.5)=0.0174%


Expected Mean of alternative B)
=0.2(0.0865%)+0.8(0.0285%)
=0.0401%

SD of Return=((0.2(0.0865%)^2+0.8(0.0285%)^2-(0.0401%)^2)^(0.5)=0.0232%

Expected Mean of alternative C)
=0.3(0.0865%)+0.7(0.0285%)
=0.0459%

SD of Return=((0.3(0.0865%)^2+0.7(0.0285%)^2-(0.0459%)^2)^(0.5)=0.0265%

Expected Mean of alternative D)
=0.4(0.0865%)+0.6(0.0285%)
=0.0517%

SD of Return=((0.4(0.0865%)^2+0.6(0.0285%)^2-(0.0517%)^2)^(0.5)=0.0284%

Expected Mean of alternative E)
=0.5(0.0865%)+0.5(0.0285%)
=0.0575%

SD of Return=((0.5(0.0865%)^2+0.5(0.0285%)^2-(0.0575%)^2)^(0.5)=0.029%

Expected Mean of alternative F)
=0.6(0.0865%)+0.4(0.0285%)
=0.0633%

SD of Return=((0.6(0.0865%)^2+0.4(0.0285%)^2-(0.0633%)^2)^(0.5)=0.0284%

Expected Mean of alternative G)
=0.7(0.0865%)+0.3(0.0285%)
=0.0691%

SD of Return=((0.7(0.0865%)^2+0.3(0.0285%)^2-(0.0691%)^2)^(0.5)=0.0265%

Expected Mean of alternative H)
=0.8(0.0865%)+0.2(0.0285%)
=0.0749%

SD of Return=((0.8(0.0865%)^2+0.2(0.0285%)^2-(0.0749%)^2)^(0.5)=0.0232%

Expected Mean of alternative I)
=0.9(0.0865%)+0.2(0.0285%)
=0.0749%

SD of Return=((0.8(0.0865%)^2+0.2(0.0285%)^2-(0.0749%)^2)^(0.5)=0.0232%


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