week 6 EC

FIN 5080 Instructor: Dr. Palkar Quiz 4 EC Page 1 of 2 You must submit your answers using Excel. Submissions using Word or PDF will not be accepted. Make sure you are using cell references while solving the problems. You must upload your work using the Assignment Drop-box. Assignments not uploaded properly will receive a grade of zero. This extra credit assignment is based on “Other Topics” Handout. 1. This assignment will require you to analyze time series of monthly returns. Start by retrieving MONTHLY data for the period of Jan 31, 2009 – Jan 31, 2015 from Yahoo Finance website (http://finance.yahoo.com/) for – Best Buy (ticker = BBY) (for Students with first names starting from A-I) – Oracle (ticker = ORCL) (for Students with first names starting from J-R) – IBM (ticker = IBM) (for Students with first names starting from S-Z) – (if you use the wrong company, no points will be allotted for this question) Instructions for downloading the data from Yahoo!: To obtain the monthly data, click on “Historical Prices” on the left panel. Select Date Range. Make sure Monthly is selected and then click on “Get Prices”. Scroll down and click on “Download to Spreadsheet”. Instructions for sorting the data by DATE: Re-sort the data so that the most previous date is at the bottom of your spreadsheet (i.e. highlight DATE columns and click on SORT, make sure “expand the selection” is selected, then click on SORT and sort by Date and order by ‘Oldest to Newest’). Calculating Returns: Use the ‘Adjusted Close’ column to obtain returns for each period. Remember that the Adjusted Close column has already adjusted the prices for dividends and stock splits so you do not have to adjust for it again. Just use the adjusted close column to obtain the returns. 1 1 = – t- t t P P R Calculate the following: a. Average Monthly returns for Ford or IBM or BBY (based on your last name). b. Standard Deviation and variance of monthly returns for Ford or IBM or BBY (based on your last name). 2. On 30 January 2002, you bought one share of ABC for $80. On 30 January 2003, the stock split 2 for 1. On 31st July 2003, the stock splits 2 for 1 and on 31st January 2004, the stock price is $25. a. Calculate the cumulative adjustment factor b. Calculate the return since you bought the stock. 3. A stock has the following year-end prices and dividends: Year Price Dividends 1 $43.12 – 2 49.07 $0.55FIN 5080 Instructor: Dr. Palkar Quiz 4 EC Page 2 of 2 3 51.19 0.60 4 47.24 0.63 5 56.09 0.72 6 67.21 0.81 Calculate: a. Returns for each year b. Arithmetic average returns c. Geometric average returns. 4. Below is the stock price and split data for ABC Company. Date Closing Price Stock Splits 2000 88.45 2001 92.67 5 for 2 2002 113.87 2003 112 2 for 1 2004 115.45 2005 116.87 3 for 1 2006 121.76 1.5 for 1 2007 118.9 2008 98.66 3 for 2 2009 92.56 a. Calculate the stock-adjusted returns for each year and its average mean, variance, and standard deviation. b. If you bought 200 shares of this stock in the beginning of 2000, how many shares would you have at the end of 2009?

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