Problem: (Expected return, standard deviation, and capital asset pricing model) Following you will find the end-of-month prices for both the Standard & Poor’s 500 Index and Ford Motor Company common stock.
|
MONTH AND YEAR
|
S&P 500
|
FORD
|
|
2003
|
|
|
|
November
|
1,055.61
|
13.20
|
|
December
|
1,108.55
|
16.00
|
|
2004
|
|
|
|
January
|
1,131.02
|
14.54
|
|
February
|
1,142.93
|
13.75
|
|
March
|
1,123.93
|
13.57
|
|
April
|
1,118.54
|
15.36
|
|
May
|
1,120.00
|
14.85
|
|
June
|
1,134.30
|
15.65
|
|
July
|
1,099.91
|
14.72
|
|
August
|
1,102.80
|
14.11
|
|
September
|
1,111.39
|
14.05
|
|
October
|
1,125.23
|
13.03
|
|
November
|
1,180.54
|
14.18
|
1. Calculate the average monthly return and the standard deviation of these returns for both the S&P 500 and Ford.