Tut 3 - Equity Mark 2 - BANK1005 Derivatives and Securities...

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BANK1005 Derivatives and Securities Markets Page 1 of 4 Tutorial 3 (Week 4) – The Equity Markets 2 © HB, July 2006 Preparation for This Tutorial This tutorial will cover some of the ideas generated mainly in the third lecture (in Week 3) but also some from the earlier lectures. New ideas are also developed in this tutorial. You need some preparation for this tutorial. For this tutorial, you should: square4 Review carefully your lecture notes for Weeks 1 to 3. square4 Complete your textbook reading related to these three weeks’ work. square4 Be able to use your calculator and bring your calculator with you. square4 Write down the formulas to calculate the mean and standard deviation of returns. What symbols are used? What does each formula “say”? square4 Know the language and key words and jot these down for use during the tutorial. Activity 1 Summarising Historical Returns – Qantas Airways Limited You are provided the share price and dividends for Qantas and the S&P/ASX Accumulation Index. Let us calculate the mean and the standard deviation of the returns for Qantas shares and for the index. Then we can compare these returns. 1. Calculate the return for each year on a Qantas share. How do we calculate return? Calculate the return for each year for the Accumulation Index. What does this return represent?
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