Question: For the past 2 months, I have been playing the stock market game for my finance class. Now the time has come to create a report about it. I am stuck on this question:
Refer to our discussions of risk and return. Which stock in your portfolio has exhibited the greatest market risk over the past 5 years, or so? How can you tell? In your answer, explain that risk measure briefly – how does it measure risk? (10 points) In answering this question, note the following.
a. This question is looking for reference to a particular risk measure and not conjecture on your part.
b. It is also looking for risk over a time frame longer than this simulation (5 years, to be exact).
c. The question refers to the stock’s market risk. So it is not looking for bankruptcy risk (which could be expressed by the debt or debt/equity ratios), so those ratios should not be used
So far, I calculated the weight of all of my stocks in my portfolio. However, I don't even know if that's what I'm supposed to be doing. I'm not sure how to get the expected return or the risk free rate to calculate the market risk. Is the expected return just a number I make up myself? Because the problems we do in class, the expected return is always given. And I have no idea where to even begin with the risk free rate. Help please! Edit
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