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S&P, Wal-Mart, and Target: Holding Period Returns

a. Use the price data from the table that follows for the Standard & Poor's 500 Index, Wal-Mart, and Target to calculate the holding period returns for the 24 month from December 2002 through November 2004.

Month and Year S&P 500 Wal-Mart Target
2002
November $928.62 $53.90 34.78
December 876.99 50.51 30.00
2003
January 854.72 47.80 28.21
February 834.75 48.06 28.65
March 864.03 52.03 29.26
April 917.77 56.32 33.44
May 953.08 52.61 36.63
June 981.06 53.67 37.84
July 989.58 55.91 38.32
August 999.31 59.17 40.60
September 1002.14 55.85 37.63
October 1049.29 58.95 39.74
November 1055.61 55.64 38.72
December 1108.55 53.05 38.40
2004
January 1131.02 53.85 37.96
February 1142.93 59.56 43.96
March 1123.93 59.69 45.04
April 1118.54 57.00 43.37
May 1120.00 55.73 44.70
June 1134.30 52.50 42.47
July 1099.91 53.01 43.60
August 1102.80 52.67 44.58
September 1111.39 53.20 45.25
October 1125.23 53.92 50.02
November 1180.54 52.06 51.22

b. Calculate the average monthly holding period returns and the standard deviation of these returns for the S&P 500 Index, Wal-Mart, and Target.

c. Plot (1) the holding-period returns for Wal-Mart against the Standard & Poor's 500 Index, and (2) the Target holding-period returns against the Standard & Poor's 500 Index.

Solution Preview

See the attached Excel file for the full solution.

Use the price data from the table that follows for the Standard & Poor's 500 Index, Wal-Mart, and Target to calculate the holding period returns for the 24 month from December 2002 through November 2004.
Price Monthly HPR
Month and Year S&P 500 Wal-Mart Target S&P 500 Wal-Mart Target

Nov-02 $928.62 $53.90 $34.78
Dec-02 $876.99 $50.51 $30.00 -5.89% -6.71% -15.93%
Jan-03 $854.72 $47.80 $28.21 -2.61% -5.67% -6.35%
Feb-03 $834.75 $48.06 $28.65 ...

Solution Summary

The holding period returns are calculated for different corporations.

$2.19