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DIAMOND RINGS SINGAPORE DOLLARS

THESE DATA GIVE THE MONTHLY RETURNS ON STOCKS AND THREE TECHNOLOGY COMPANIES: DELL, IBM, AND MICROSOFT. FOR EACH MONTH FROM JANUARY 1990 THROUGH THE END OF 2005 (192 MONTHS), THE DATA GIVE THE RETURN EARNED BY OWNING A SHARE OF STOCK IN EACH COMPANY.

A. Describe and contrast histograms and boxplots of the three companies. Be sure to use a common scale for the data axes of the histograms to make the comparison easier and more reliable.

B. Find the mean, standard deviation, and coefficient of variation for each set of returns. Are means and standard deviations useful summaries of variables such as these?

C. What does comparison of the coefficients of variation tell you about these three stocks?

D. Investors prefer stocks that grow steadily over time. In that case, what values are ideal for the mean and standard deviation of the returns? For the coefficient of variation?

E. It is common to find that stocks that have a high average return also tend to be more volatile, with larger swings in price. To earn the higher average rate of return, the investor must tolerate more volatility. Is that true for these three stocks?