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Unformatted text preview: Mercedes Jones, Brett Sauers Prof . Mao Project Part 1 . In observing the mean I found ( SPY ) to have a mean of .0070 , ( HON ) to have a mean of .0116 , and ( TLF ) to have a mean of .0119. This is signifying the average monthly return for each security . Next, I found the standard deviation of each security; ( SPY: .0458 ) ( HON: .0958) ( TLF: .1427 ) . By definition the standard deviation is the measure of dispersion away from the mean . It tells you how likely it is a randomly chosen sample will be at or near the mean. The lower the standard deviation the less risky the security is . The higher the standard deviation the more risk associated with the security . Knowing this I concluded that I believe the riskiest security in our discussion is ( TLF ) followed by ( HON) and the least risk associated with ( SPY ) . Thirdly, I observed the beta of ( HON) and ( TLF ) relative to ( SPY ) as the market portfolio . ( HON ) beta equaled 1 .3035 and ( TLF ) equaled .3869 . Beta is a number describing the relation of a stock’s return with those of the financial market as a whole . In our discussion the overall market is ( SPY ) which is an ETF tied to the S&P 500 (a widely used benchmark) . The market is said to have a beta of 1 . With my knowledge of beta I concluded that ( HON ) will follow the market closer than ( TLF ) . PART 2 1 ....
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This note was uploaded on 01/19/2012 for the course N.A N./A taught by Professor N/a during the Spring '11 term at UPenn.
- Spring '11