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Question: Find the daily stock price of Wal-Mart for the last three months. (A good source for the data is http://moneycentral.msn.com. You can ask for the three-month chart and export the data to a spreadsheet.)

1. Calculate the mean and the standard deviation of the stock prices.

2. Get the corresponding data for Kmart and calculate the mean and the standard deviation.

3. The coefficient of variation (CV) is defined as the ratio of the standard deviation over the mean. Calculate the CV of Wal-Mart and Kmart stock prices.

4. If the CV of the daily stock prices is taken as an indicator of risk of the stock, how do Wal-Mart and Kmart stocks compare in terms of risk? (There are better measures of risk, but we will use CV in this exercise.)

5. Get the corresponding data of the Dow Jones Industrial Average (DJIA) and compute its CV. How do Wal-Mart and Kmart stocks compare with the DJIA in terms of risk?

6. Suppose you bought 100 shares of Wal-Mart stock three months ago and held it. What are the mean and the standard deviation of the daily market price of your holding for the three months?

Statistics and Probability, Statistics

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