On Friday, the Dow Jones Index closes at 20,755, up 330 points from its closing level one week earlier of 20,425.
a) What was the rate of return over the week (the holding period return)?
b) What would this return be expressed as an annualized rate, assuming exactly 52 weeks in a year. Do the calculation at simple interest and also as a compounded rate.
c) Suppose the standard deviation of the annual percent return on the Dow is 24.0% What is the standard deviation per week?
d) Given your answer to c., was this week's price change unusually large?