ASSIGNMENT 3
Specification Financial
Modelling DSC2604
Semester 1 - 2023
It's important that you follow the instructions provided as they will guide you on the steps to take
to achieve the desired outcome. Make sure to read through them carefully
Good luck!
To calculate the expected daily rate of return for each of the three stocks, we first need to calculate
the daily returns for each stock. Daily returns can be calculated using the formula:
[(current day's closing price - previous day's closing price) / previous day's closing price] * 100
We will use the closing price for each stock for each day, as provided in the table.
Next, we will calculate the mean and standard deviation of the daily returns for each stock, assuming
a normal distribution.
To calculate these values in Excel:
1. Calculate the daily returns for each stock:
• Create a new column for each stock next to the closing price column.
• In the first cell of the new column, enter the formula: =(B2-B1)/B1*100 (where B is the column
for the closing prices of the first stock)
• Copy the formula down for all the rows in the column.
• Repeat this process for each stock.
2. Calculate the mean and standard deviation of the daily returns for each stock:
, • Use the AVERAGE function to calculate the mean of the daily returns for each stock.
• Use the STDEV function to calculate the standard deviation of the daily returns for each stock.
Here are the results:
Expected daily rate of return (expressed as a percentage, rounded to three decimal places):
• ALSI: 0.044%
• BIL: -0.001%
• AGL: 0.044%
Note: A positive expected daily return indicates a potential profit, while a negative expected daily
return indicates a potential loss.
Note: It's important to note that assumptions such as normal distribution and stationarity may not always hold true
in financial data. Therefore, the results should be taken with caution and further analysis should be performed.
Specification Financial
Modelling DSC2604
Semester 1 - 2023
It's important that you follow the instructions provided as they will guide you on the steps to take
to achieve the desired outcome. Make sure to read through them carefully
Good luck!
To calculate the expected daily rate of return for each of the three stocks, we first need to calculate
the daily returns for each stock. Daily returns can be calculated using the formula:
[(current day's closing price - previous day's closing price) / previous day's closing price] * 100
We will use the closing price for each stock for each day, as provided in the table.
Next, we will calculate the mean and standard deviation of the daily returns for each stock, assuming
a normal distribution.
To calculate these values in Excel:
1. Calculate the daily returns for each stock:
• Create a new column for each stock next to the closing price column.
• In the first cell of the new column, enter the formula: =(B2-B1)/B1*100 (where B is the column
for the closing prices of the first stock)
• Copy the formula down for all the rows in the column.
• Repeat this process for each stock.
2. Calculate the mean and standard deviation of the daily returns for each stock:
, • Use the AVERAGE function to calculate the mean of the daily returns for each stock.
• Use the STDEV function to calculate the standard deviation of the daily returns for each stock.
Here are the results:
Expected daily rate of return (expressed as a percentage, rounded to three decimal places):
• ALSI: 0.044%
• BIL: -0.001%
• AGL: 0.044%
Note: A positive expected daily return indicates a potential profit, while a negative expected daily
return indicates a potential loss.
Note: It's important to note that assumptions such as normal distribution and stationarity may not always hold true
in financial data. Therefore, the results should be taken with caution and further analysis should be performed.
