a b axb

Time Stock Market

Period 1 2 3 Index 2.51%
1 10.0% 11% -6% 11% -13.20% 4.60% -0.61%
2 8.0% 4% 18% 7% 10.80% 0.60% 0.06%
3 -4.0% -3% 4% -2% -3.20% -8.40% 0.27%
4 22.0% -2% -5% 8% -12.20% 1.60% -0.20%
5 8.0% 14% 32% 9% 24.80% 2.60% 0.64%
6 -11.0% -9% -7% -5% -14.20% -11.40% 1.62%
7 14.0% 15% 24% 12% 16.80% 5.60% 0.94%
8 12.0% 13% -17% 11% -24.20% 4.60% -1.11%
9 -9.0% -3% 2% 3% -5.20% -3.40% 0.18%
10 12.0% 4% 27% 10% 19.80% 3.60% 0.71%
Mean 6.2% 4.4% 7.2% 6.4% Average of returns
Variance 1.14% 0.72% 2.84% 0.34% (Summation of (Returns - Mean
Std. Dev. 10.70% 8.51% 16.84% 5.85% Square root of Variance
Corr. Coef. 0.84 0.85 0.28 1.00
Beta 1.53 1.24 0.81 1.00
 a2 b2 Corr. Coef.

25.54% 3.08% 0.28

1.74% 0.21%
1.17% 0.00%
0.10% 0.71%
1.49% 0.03%
6.15% 0.07%
2.02% 1.30%
2.82% 0.31%
5.86% 0.21%
0.27% 0.12%
3.92% 0.13%

(Returns - Means)2)÷ (n-1)

 Expected Returns
Probabilities a b c
1 recession and high interest rates 20% (18.00) (13.00) (4.00)
2 recession and low interest rates 25% 16.00 16.00 (2.00)
3 boom and high interest rates 30% 12.00 32.00 21.00
4 boom, low interest rates and oil shortage 25% 40.00 12.00 20.00
Weighted Expected Returna 14.00 14.00 10.00
Varianceb 376.00 245.00 136.50
Standard Deviationc 19.39 15.65 11.68
Co-Varianced 182.00 129.00 104.00
Correlation Coefficiente 0.90 0.79 0.85
Betaf 1.67 1.18 0.95

a b c
Wtd. Return 14.00 14.00 10.00
1 (3.60) (2.60) (0.80)
2 4.00 4.00 (0.50)
3 3.60 9.60 6.30
4 10.00 3.00 5.00

Variance 376.00 245.00 136.50

1 204.80 145.80 39.20
2 1.00 1.00 36.00
3 1.20 97.20 36.30
4 169.00 1.00 25.00

Std. Dev. 19.39 15.65 11.68

Co-Variance 182.00 129.00 104.00

1 121.60 102.60 53.20
2 (1.00) (1.00) 6.00
3 (3.60) 32.40 19.80
4 65.00 (5.00) 25.00

Corr. Coeff. 0.90 0.79 0.85

Beta 1.67 1.18 0.95

Returns
m
(9.00) INTERPRETATION
8.00
16.00
20.00
10.00
109.00
10.44
109.00
1.00
1.00

m
10.00
a
Sum of (Expected Returnsp x probabilitysp)
(1.80)
b
Sum of (Expected Returns - Wtd. Returns)2 x probabilitysp
2.00 c
Square root of Variance
4.80
d
Sum of (Expected Returnsp - Wtd. Returns) x (Expected Returnmp - Wtd. Return
5.00
e
Co-Var.s ÷ (Std. Dev.s x Std. Dev.m)
f
Corr. Coeffs x (Std. Dev.s ÷ Std. Dev.m)
109.00
72.20
1.00
10.80
25.00

10.44

109.00
72.20
1.00
10.80
25.00

1.00

1.00
mp
- Wtd. Returnm) x probabilitysp

4 5 6
Expected Return (%) 169.00 1.00 25.00
Variance #REF! #REF! #REF!
Standard Deviation (%) 182.00 129.00 104.00
Risk Free Rate 3.00%
Return
Stock Required Expected Finding
a 14.69% 14.00% overvalued
b 11.28% 14.00% undervalued
c 9.68% 10.00% undervalued