Question 1: Calculate the arithmetic average, the geometric average, the variance and standard deviation For the S&P 500 index for the decade of 1980-1990. Do the same calculations for the S&P 500 index for 2000-2010. Compare and contrast your answers and provide explanations for the similarities and differences. Calculate the statistical measures using both annual and monthly returns, but compare and contrast using only annual data. [answer should only be approximately 1/2 page in length, spreadsheet calculations not included]
Question 2: Find the adjusted monthly prices for the past year for both Novartis AG (NVS) and Pfizer (PFE). Assume you just inherited $3000. You plan to use half of your inheritance in Novartis AG and the other half in Pfizer. You purchase (go long) in Novartis and sell short Pfizer. Both transactions are done using margin where the initial margin is 50% and the maintenance margin is 30%. Using only monthly prices, determine if either strategy received a margin call and if so how much. What is the return on both investments? Explain the differences or similarities in returns. [answer should only be approximately 1/2 -2/3, spreadsheet calculations not included]