Does the aggregate measures of stock prices include dividend income?
T Aggregate measures of stock prices include dividend income. F The Dow Jones industrial and utility averages include a relatively small number of stocks. T If a stock increased from $25 to $50 in five years, the annual rate of return was 20 percent. F The rate of return on a stock considers the price change but not dividend income. F
What does the rate of return on a stock consider?
F The rate of return on a stock considers the price change but not dividend income. F Realized returns include both dividends and price changes. T Movements in stock prices are often illustrated using relative (percentage) price changes instead of absolute price changes.
What must be decreased to reduce the risk of investing in stocks?
It must be decreased in proportion to how risky the stock is. It must include the risk-free return and a risk premium. a. How much total wealth has risen or fallen b.
What is the standard deviation of a stock with low volatility?
Standard deviation is reflected by the width of the Bollinger Bands. The wider the Bollinger Bands, the more volatile a stock's price within the given period. A stock with low volatility has very narrow Bollinger Bands that sit close to the SMA.
What is the most common way to measure market volatility?
Standard deviation is the most common way to measure market volatility, and traders can use Bollinger Bands to analyze standard deviation. Maximum drawdown is another way to measure stock price volatility, and it is used by speculators, asset allocators, and growth investors to limit their losses. Beta measures volatility relative to ...
What is the measure of volatility?
This metric reflects the average amount a stock's price has differed from the mean over a period of time. It is calculated by determining the mean price for the established period and then subtracting this figure from each price point. The differences are then squared, summed, and averaged to produce the variance .
What is volatility in investing?
The most simple definition of volatility is a reflection of the degree to which price moves. A stock with a price that fluctuates wildly—hits new highs and lows or moves erratically—is considered highly volatile.
