Problem+Set+1+Eccon+136 - Problem Set 1 Econ 136, Spring...

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Unformatted text preview: Problem Set 1 Econ 136, Spring 2012 This problem set is due on February 5 in class. Sorry, no late problem sets are accepted! All students must submit problem sets individually. Please write your name, section time and GSI on the front page of your solution. Do these in EXCEL where relevant. Note on rounding: please round all percentage returns to two digits after the decimal point: e.g., 5.45% or 1.0545. 1. Internet Exercise: US and Foreign Stock Markets in the Past Five Years This exercise is designed to introduce you to the recent behavior of the US and foreign stock markets and give you an idea of the finance-related tools available on the Internet. Go to the Yahoo! Finance website at http://finance.yahoo.com/. Type .^DJI.in the box in the top left and click .Get quotes. . This will take you to a page of general information about the Dow Jones Industrial Average index. From the menu on the left, select .Basic Chart. . This will give you a chart of the index over the last year (you may have to scroll down to see it). You can change the historical range by clicking .5y.to see the past five years, or .max. to see all available historical data. (a) Note that you may change the scale by selecting .Linear. or .Log. next to the .Scale. sign in the upper right-hand corner of the chart box. What are the advantages and the disadvantages of using each? Which gives a better picture of the past performance of the index? (b) You can compare the performance of the Dow Jones with that of the S&P500 (another major US stock market index), the Nasdaq (a US index dominated by technology stocks), and the Nikkei 225 (the major Japanese stock index) by entering ^N225 in the blank box immediately above the chart labelled .Compare., checking the boxes for the S&P500 and the Nasdaq, and clicking .Compare.. You should see results plotted for 4 indexes....
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Problem+Set+1+Eccon+136 - Problem Set 1 Econ 136, Spring...

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