Solutions Statistics

Your are given information on 15 days of trading on Dow Jones for 3 stocks. You wish to invest in th

Question: Your are given information on 15 days of trading on Dow Jones for 3 stocks. You wish to invest in the stock market and want to choose between the stocks. The summary statistics for the 15 days of stock prices are given below.

*Stock A*		*Stock B*		*Stock C*

*Mean*	*22.406667*	*Mean*	*119.7933333*	*Mean*	*22.1333333*
Standard Error	1.0280109	Standard Error	1.628480644	Standard Error	2.09788253
Median	23.4	Median	122	Median	22.3
Mode	#N/A	Mode	#N/A	Mode	#N/A
*Standard Deviation*	*3.981469*	*Standard Deviation*	*6.307078412*	*Standard Deviation*	*8.1250641*
Sample Variance	15.852095	Sample Variance	39.7792381	Sample Variance	66.0166667
Kurtosis	-0.120224	Kurtosis	-0.57320028	Kurtosis	4.24683558
Skewness	-0.291672	Skewness	-0.84606872	Skewness	1.73240294
Range	15	Range	18.8	Range	32.7
Minimum	14.2	Minimum	108.2	Minimum	12.8
Maximum	29.2	Maximum	127	Maximum	45.5
Sum	336.1	Sum	1796.9	Sum	332
Count	15	Count	15	Count	15

a) Stocks A and C have approximately the same mean Dow Jones average during this period. Which stock is more volatile from the investor’s perspective? Explain your answer using the sample variance.

b) Compute the CV (Coefficient of variation) Stocks A, B, and C and discuss which Stock is the safest from the investor’s perspective.

c) In the above, the sample variances given were all computed taking the data as samples. If you were to consider these data sets as populations, will the mean and/or the standard deviation be the same or different?