Question 1
Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link above.
A. Using the two stocks you selected from Homework #1 (Facebook & Comcast), identify the Beta for each stock. In your own words, what conclusion can you draw from the stocks’ current and historical beta? If the stock market went up 10% today, what would be the impact on each of your stocks?
B. Using the 2014 financial statements from your stocks above and the equations from your textbook, prepare the Historical Average and Standard Deviation for each stock.
Question 2
The Dow Jones Industrial Average had the following annual returns:
Year Return
2012 7.3%
2013 26.5%
2014 7.5%
2015 -2.2%
2016 13%
Using just these last 5 years of data, what is the expected return for the Dow Jones? What is the standard deviation of the returns? Please show and explain your work.
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