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Average monthly return and the standard deviation of returns

Following you will find the end-of-month prices for both the Standard & Poor's 500 Index and Ford Motor Company common stock.
1. Calculate the average monthly return and the standard deviation of these returns for both the S&P 500 and Ford.

S&P 500 Ford
2003 November 1,055.61 13.20
December 1,108.55 16.00
2004 January 1,131.02 14.54
February 1,142.93 13.75
March 1,123.93 13.57
April 1,118.54 15.36
May 1,120.00 14.85
June 1,134.30 15.65
July 1,099.91 14.72
August 1,102.80 14.11
September 1,111.39 14.05
October 1,125.23 13.03
November 1,180.54 14.18

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** See ATTACHED Excel file for complete solution, including formulas and calculations **

(Expected return, standard deviation, and capital asset pricing model) Following you will find the end-of-month prices for both the Standard & Poor's 500 Index and Ford Motor Company common stock.

S&P 500 Ford
2003 November 1,055.61 13.20
December 1,108.55 16.00
2004 January 1,131.02 14.54
February 1,142.93 13.75
March 1,123.93 13.57
April 1,118.54 15.36
May 1,120.00 14.85
June 1,134.30 15.65
July 1,099.91 14.72
August 1,102.80 14.11
September 1,111.39 14.05
October 1,125.23 13.03
November 1,180.54 14.18

1.       Calculate the average monthly return and the standard deviation of these returns for both the S&P 500 and Ford.

Step1 : Calculate the monthly returns

S&P ...

Solution Summary

Calculates average monthly return and the standard deviation of these returns for the S&P 500 and Ford.

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