I'm not following this problem at all I understand the terms such as median quartile and such but I just don't understand stocks so can you lend me a hand
The rate of return on a stock is its change in price plus any dividends paid, usually measaured in percen of the srating value. We have data on the monthly rate of return ofr the stock of Wal-Mart stors fro the years 1973 to 1991, the first 19 years Wal-Mart was listed on the New York Stock Exchange. There are 228 observations. Here is the output from the computer statistical package SPLUS that describes the distribution of these data
the book then give 5 number summary then the stemp plot with the outliers listed separately
the question
If you had 1 grand worht of Wal-Mart stock at the beginning fo the best month during these 19 years, how much would your stock be worth at the end of the month?
The highest outlier listed separately is
58.67769
so I'm not exaclty sure what to do what that number and 1 grand to find the value at the end of the month...
thanks!
To determine the value of your Wal-Mart stock at the end of the best month, you can use the rate of return data given. The highest outlier listed separately (58.67769) represents the rate of return for that particular month.
To calculate the value at the end of the month, you would add the rate of return to the starting value of your stock. In this case, the starting value is $1,000 (1 grand).
The formula to calculate the value at the end of the month is:
Ending Value = Starting Value + (Starting Value * Rate of Return)
In this case, the Rate of Return is 58.67769%. So you would calculate:
Ending Value = $1,000 + ($1,000 * 0.5867769)
Calculating this, your stock would be worth:
Ending Value = $1,000 + $586.7769 = $1,586.7769
Therefore, if you had $1,000 worth of Wal-Mart stock at the beginning of the best month during these 19 years, it would be worth approximately $1,586.78 at the end of the month.