Milk Brands Cluster Explanation, Dendrogram

Answer:

1. The company that I have choose namely LFC. It is a global company.The data is stated in the Excel sheet.
2. The historical stock price is as listed in the Excel sheet. (from 2008/11/1 to 2018/11/5);

1. The price histogram over 10 years

[pic 1]

This graph  indicates that the frequency of historical stock price. We may clearly see in the chart , the stock price of LFC is most frequently between around 1 to 16 dollars.

1. Historical stock return data and stock return histogram over 10 year.

[pic 2]Bin

        Frequency

-27.34        1                    

-24.56032136        0

-21.78064273        0

-19.00096409        0

-16.22128545        0

-13.44160682        0

-10.66192818        0

-7.882249545        0

-5.102570909        0

-2.322892273        3

0.456786364        66

More                    52

C ) Use the same data set to construct a pivot

table to make the count of ups and downs of

stock prices over the period.

[pic 3]

d). Descriptive (summary) statistics of stock returns for the period.

From the return histogram, we can see that stock return rate of the company has maintaining for the past ten years. And it keeps a positive increase of stock return.

3) The CEO of the company you have chosen recently made a promise to shareholders that the company will continue to maintain the average annual rate of return at 10%. 10% has been set up as the long-term objective of the company since its establishment. A similar promise was made by his/her predecessor a few years ago. Would you believe this promise?

d) above as your sample data and to follow 4-point structure of hypothesis testing to conduct a statistical test (assume significance level of 5%) in order to answer the question. Note: ignore dividend payments and major events such as merges and takeovers.

Answer :

From the Descriptive statistic for %Stock return rate in the excel:

Sample Mean -0.76/ month

Sample Variance 77.38

Sample no = 59

Maintain the average annual return rate = 10% / year

µ = 0.833% / month