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Average monthly return and the standard deviation of returns

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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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See Also This Related BrainMass Solution

Calculate Average Monthly Return, Standard deviation and Beta

See the attached files.

a) Following the instructions in the Appendix, obtain monthly returns for these stocks from January 2006 to December 2010. Also, obtain monthly returns for the S&P 500 index over the same period. You do not need to report the monthly returns. Your answers to the remaining questions in this part will reveal whether or not you did the right thing.

I did that for the ten companies---I put it in two forms excel spreadsheet and regular word. Need help with b and c.

b) Calculate the average monthly return and its standard deviation for each stock. Based on the standard deviations, rank the stocks from the least risky to the most risky.

c) Using the monthly returns obtained in (a) above, compute the beta for each of the stocks. Based on the betas, rank the stocks from the least risky to the most risky.

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