ASSIGNMENT 3
Specification
Financial
Modelling DSC2604
Semester 1 - 2023
1
, Terms of USE :
• You may only use this document as a guide for examining compensation and as a reference for informational purposes.
• You agree not to duplicate, reproduce, or misrepresent the contents of this document as your own work.
• You will be solely responsible for any consequences resulting from any misuse of this document, including legal actions taken against you.
• The contents of this document are provided "as is" without any warranties, express or implied, and the author assumes no liability for any consequences arising
from your use.
• The document is intended for comparison, research, and reference purposes only and cannot be reproduced, sold, or transmitted without express written
permission from the author. By using this document, you acknowledge that you have read and understood these terms and agree to be bound by them. If you do not
agree, you are not authorized to use this document.
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):
2
Specification
Financial
Modelling DSC2604
Semester 1 - 2023
1
, Terms of USE :
• You may only use this document as a guide for examining compensation and as a reference for informational purposes.
• You agree not to duplicate, reproduce, or misrepresent the contents of this document as your own work.
• You will be solely responsible for any consequences resulting from any misuse of this document, including legal actions taken against you.
• The contents of this document are provided "as is" without any warranties, express or implied, and the author assumes no liability for any consequences arising
from your use.
• The document is intended for comparison, research, and reference purposes only and cannot be reproduced, sold, or transmitted without express written
permission from the author. By using this document, you acknowledge that you have read and understood these terms and agree to be bound by them. If you do not
agree, you are not authorized to use this document.
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):
2
