Arithmetic Average, Standard Deviation and Returns
variance and standard deviation For the S&P 500 index for the decade of
1980-1990. Do the same calculations for the S&P 500 index for 2000-2010.
Compare and contrast your answers and provide explanations for the similarities
and differences. Calculate the statistical measures using both annual and
monthly returns, but compare and contrast using only annual data. [answer
should only be approximately 1/2 page in length, spreadsheet calculations not
included]
2. Find the
adjusted monthly prices for the past year for both Novartis AG (NVS) and Pfizer
(PFE). Assume you just inherited $3000. You plan to use half of your
inheritance in Novartis AG and the other half in Pfizer. You purchase (go long)
in Novartis and sell short Pfizer. Both transactions are done using margin
where the initial margin is 50% and the maintenance margin is 30%. Using only
monthly prices, determine if either strategy received a margin call and if so
how much. What is the return on both investments? Explain the differences or
similarities in returns. [answer should only be approximately 1/2 -2/3, spreadsheet
calculations not included]
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