Returns on common stocks. The return on a stock is the change in itsmarket price plus

Chapter 0, Problem 1.31

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Returns on common stocks. The return on a stock is the change in itsmarket price plus any dividend payments made. Total return is usuallyexpressed as a percent of the beginning price. Figure 1.14 is a histogram of the distribution of the monthly returns for all stocks listed on U.S. markets fromJanuary 1980 to March 2005 (243 months).19 The extreme low outlier is themarket crash of October 1987, when stocks lost 23% of their value in onemonth.(a) Ignoring the outliers, describe the overall shape of the distribution ofmonthly returns.(b) What is the approximate center of this distribution? (For now, take thecenter to be the value with roughly half the months having lower returns andhalf having higher returns.)(c) Approximately what were the smallest and largest monthly returns,leaving out the outliers? (This is one way to describe the spread of thedistribution.)(d) A return less than zero means that stocks lost value in that month. Aboutwhat percent of all months had returns less than zero?