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  3. 1. (20 points) refer to the table below. the table

1. (20 points) Refer to the table below. The table below shows the annual returns...

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Finance

1. (20 points) Refer to the table below. The table below shows the annual returns (in percentages) for 2 major market indices. For each index, calculate the arithmetic mean return and the geometric mean return of full-year returns from 2005-2015. What is the relationship between the arithmetic and geometric mean returns?

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
NASDAQ Composite Index 1.37 8.59 50.0 -31.5 -21.1 -39.3 85.6 39.6 21.6 22.7 39.9
Dow Jones Industrial Average -0.61 3.15 25.3 -16.8 -7.1 -6.2 25.2 16.1 22.6 26.0 33.5

2. (i) Estimate the stock beta for Walt Disney Co (DIS). Download the monthly closing prices for 5 years into Excel. Choose a market index (e.g. S&P 500) and download the monthly closing values for 5 years into Excel. Calculate the monthly returns for Walt Disney Co (DIS) and the market index. Using the regression function in Excel, regress the stock return on the market index return. (ii) Compare and contrast the stock beta you estimated with two other sources (e.g. Yahoo! Finance, CNBC, etc.).

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