nhw2a - Homework 2 1. Use Google Finance to look at stock...

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1. Use Google Finance to look at stock prices, look for GOOG(Google), follow the link for historical prices. Look at weekly returns from Aug 26, 2008 to Aug 25, 2009, and then click on Download to spreadsheet. Use the “Close” values to calculate weekly returns. From this data find Google’s arithmetic weekly return and variance (make sure your variance is unbiased due to the small sample). Use these answers to find the estimated geometric return. Compare this estimated value to the real one. Useful excel commands: Finds unbiased sample variance=Var(data range) Finds the Geometric mean=Geomean(data range). Note the direct data from excel will need to be manipulated before these commands will work. Arithmetic average .001854 Unbiased sample Variance .004043 Estimated geomean= -.00017 Actual geomean= -.00008 2. In order for you to be indifferent between the after tax returns on a corporate bond paying 8.5% and a tax-exempt municipal bond paying 6.12%, what would your tax bracket need to be? (.0612)= (.085)*(1-T) T=.28 3. Find the holding period returns for each of the three years: Start price End price Year-end dividend 2006 83.5 88.54 2.5 2007 88.54 84.21 1.5 2008 84.21 93.87 2.5 HPR=(End-Start+dividend)/(start) 2006) .090299
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This note was uploaded on 10/15/2011 for the course ECON 171 taught by Professor Hull during the Spring '09 term at Brandeis.

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nhw2a - Homework 2 1. Use Google Finance to look at stock...

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