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Business and Finance Statistics for Business and Finance

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Added on  2020-05-16

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The IBM price index has increased from 1/12/2010 to 31/05/2011 at a return of 12.39 %. The IBM price index has increased from 1/12/2010 to 31/05/2011 at a return of 12.39 %. The IBM price index has increased from 1/12/2010 to 31/05/2011 at a return of 12.39 %. The IBM price index has increased from 1/12/2010 to 31/05/2011 at a return of 12.39 %. The IBM price index has increased

Business and Finance Statistics for Business and Finance

   Added on 2020-05-16

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Running head: STATISTICS FOR BUSINESS AND FINANCE Statistics for Business and FinanceName of the Student:Name of the University:Author’s note:
Business and Finance Statistics for Business and Finance_1
1STATISTICS FOR BUSINESS AND FINANCETable of ContentsIntroduction:................................................................................................................................................................................................2Discussion and Data Analysis:....................................................................................................................................................................21.Line Charts of Close prices:.............................................................................................................................................................22.Calculation with return prices:..........................................................................................................................................................32.a. Calculation of returns:...................................................................................................................................................................32.b. Summary Statistics:......................................................................................................................................................................52.c. Jarque - Bera test of normality:.....................................................................................................................................................53.Testing of average return price of Boeing:.......................................................................................................................................54.Comparison of risk associated to each of the BA and IBM price returns:.......................................................................................65.Comparison of average returns of each of the two investing price returns:.....................................................................................66.Calculation of Excess Return and Excess Return:............................................................................................................................87.CAPM calculation by linear regression method:..............................................................................................................................97.a. Estimation of CAPM using linear regression:..............................................................................................................................97.b. Interpretation of Coefficients:.....................................................................................................................................................107.c. Interpretation of R2:.....................................................................................................................................................................107.d. Construction of 95% confidence interval for Slope Efficient:...................................................................................................118.Preferable neutral Price Return:......................................................................................................................................................119.Normal Probability Plot in OLS:....................................................................................................................................................11Annotated Bibliography:...........................................................................................................................................................................13
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2STATISTICS FOR BUSINESS AND FINANCEIntroduction:The report discusses about the volatility and risk of stock market, return and market return. Usually, it is observed that stockmarket is volatile and unsteady (Berenson et al. 2012). Therefore, it is hard for evaluating the market performance. The report focusesto indicate the method of evaluating the company’s Price indexes through its market price movements. The price indexes for Boeingand International Business Machines (IBM) has been chosen for demonstrating (Freed, Bergquist and Jones 2014). However, thehistorical price movements of the individual price indexes from 1st December 2010 and 31st May 2016 cannot depict the appropriateoutputs. Therefore, the historical index prices of S&P500 index and the 10 years’ US Treasury Bill are involved in the evaluationmethod for computing the effective outcomes. S&P500 index represents the summarisation of the market and the 10 years’ USTreasury Bill refers the risk-free return of the market.The method of price index evaluation is divided in some parts. They are the compared and their market returns are calculatedin the first part. In the next part, hypotheses are tested and CAPM is calculated using linear regression model. The whole evaluation isincorporated based on Capital Asset Pricing Model. Discussion and Data Analysis:1.Line Charts of Close prices:The movement of the price indexes for a defined time-period depicts trends of price indexes. The first line chart involves all thethree types of trend lines of price indexes. The second, third and fourth line charts involve the line charts individually. The priceindexes of IBM and BA in the line charts are shown below:12/1/20102/1/20114/1/20116/1/20118/1/201110/1/201112/1/20112/1/20124/1/20126/1/20128/1/201210/1/201212/1/20122/1/20134/1/20136/1/20138/1/201310/1/201312/1/20132/1/20144/1/20146/1/20148/1/201410/1/201412/1/20142/1/20154/1/20156/1/20158/1/201510/1/201512/1/20152/1/20164/1/201605001000150020002500Comparison of Price IndexesS& P 500Boeing (BA)IBM DatePriceIndex
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3STATISTICS FOR BUSINESS AND FINANCE12/1/20102/1/20114/1/20116/1/20118/1/201110/1/201112/1/20112/1/20124/1/20126/1/20128/1/201210/1/201212/1/20122/1/20134/1/20136/1/20138/1/201310/1/201312/1/20132/1/20144/1/20146/1/20148/1/201410/1/201412/1/20142/1/20154/1/20156/1/20158/1/201510/1/201512/1/20152/1/20164/1/201605001000150020002500S&P500 Price IndexS& P 500DatePriceIndex12/1/20102/1/20114/1/20116/1/20118/1/201110/1/201112/1/20112/1/20124/1/20126/1/20128/1/201210/1/201212/1/20122/1/20134/1/20136/1/20138/1/201310/1/201312/1/20132/1/20144/1/20146/1/20148/1/201410/1/201412/1/20142/1/20154/1/20156/1/20158/1/201510/1/201512/1/20152/1/20164/1/2016020406080100120140160Boeing (BA) Price IndexBoeing (BA)DatePriceIndex12/1/20102/1/20114/1/20116/1/20118/1/201110/1/201112/1/20112/1/20124/1/20126/1/20128/1/201210/1/201212/1/20122/1/20134/1/20136/1/20138/1/201310/1/201312/1/20132/1/20144/1/20146/1/20148/1/201410/1/201412/1/20142/1/20154/1/20156/1/20158/1/201510/1/201512/1/20152/1/20164/1/2016050100150200250IBM Price IndexIBM DatePriceIndexIt could be inferred from the above line charts that the price indexes of both S&P500 and BA have increased from 01/12/2010to 31/05/2016. The IBM price index has increased and then decreased within this period. It has better stationary trend in case of IBMprice index than BA price index. 2.Calculation with return prices:2.a. Calculation of returns:Price IndexesPrice ReturnsDateS& P 500 price Boeing (BA) price IBM price T-Bill price S&P 500 price returnBoeing (BA) price returnIBM Price return
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