Question

10. Suppose that observations on a stock price (in dollars) at the end of each of 15 consecutive weeks are as follows: 30.2, 32.0, 31.1, 30.1, 30.2, 30.3, 30.6, 33.0, 32.9, 33.0, 33.5, 33.5, 33.7, 33.5, 33.2 Estimate the stock price volatility. What is the standard error of your estimate?

Answer 1

The average stock price =(30.2+ 32.0+31.1+30.1+30.2+30.3+30.6+33.0+ 32.9+33.0+ 33.5+33.5+33.7+33.5+ 33.2)/15 = 32.0533
Stock Price Volatility
Standard Deviation =((30.2-32.0533)^2+ (32.0-32.0533)^2+(31.1-32.0533)^2+(30.1-32.0533)^2+(30.2-32.0533)^2+(30.3-32.0533)^2+(30.6-32.0533)^2+(33.0-32.0533)^2+ (32.9-32.0533)^2+(33.0-32.0533)^2+ (33.5-32.0533)^2+(33.5-32.0533)^2+(33.7-32.0533)^2+(33.5-32.0533)^2+ (33.2-32.0533)^2)/(15-1))^0.5 = 1.46

Standard error = Standard Deviation/(n^0.5) = 1.461311/15^0.5 = 0.3773

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