Professional Documents
Culture Documents
)
Equivalently, we have
( )
)
Exercises
1. What is the simple return on the stock for the period April 1, 2014 to May 1,
2014?
2. What is the annualized monthly return for the said period?
In general, if the simple return on the stock for a period of length shorter than one
year and
are the stock prices at the beginning and end of the period,
respectively, then
)
Equivalently
( )
( )
Usually, is chosen so that there are periods of length in one year, that is,
. Thus we have
( )
)
Exercises
3. What is the simple return on the stock for the period October 2, 2013 to January
2, 2014?
4. What is the annualized simple return for the said period?
Expected return
The expected return is given by
()
Exercise
1. Estimate the sample mean return on one share of PLDT using the above 12-
month data of closing stock prices.
Risk
The risk of an asset is given by the variance of the return. That is
()
Exercise
2. Estimate the risk of PLDT stock using sample variance of the given data above.