Use the monthly data (September 2013 - November 2014) provided on the closing pr

Question

Use the monthly data (September 2013 - November 2014) provided on the closing prices for Gold (GLD), NASDAQ, Oil (USO) and Facebook (FB).

What is the mean monthly return for NASDAQ during the sample period?

-1.60%

-0.68%

3.12%

1.64%

Date GLD NASDAQ USO FB Sep-13 128 3771 37 50 Oct-13 128 3920 35 50 Nov-13 121 4060 33 47 Dec-13 116 4177 35 55 Jan-14 120 4104 35 63 Feb-14 128 4308 37 68 Mar-14 124 4199 37 60 Apr-14 124 4115 36 60 May-14 120 4243 38 63 Jun-14 128 4408 39 67 Jul-14 123 4370 36 73 Aug-14 124 4580 36 75 Sep-14 116 4493 34 79 Oct-14 113 4631 31 75 Nov-14 115 4713 29 74

Explanation / Answer

The Index in Sept-13 is 3771 and the Index in Nov-14 is 4713. So the change over 14 months can be written as

3771*(1+g)^14=4713

or (1+g)=(4713/3771)^(1/14)=1.016055

or g=0.016055 or 1.6055%

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