Exercise

# Compute simple monthly returns

For the remaining exercises, consider a one-month investment in two Northwest stocks: Amazon and Costco.

Suppose you buy Amazon and Costco at the end of September at \(P_{A, t-1} = 38.23, P_{C, t-1} = 41.11\) and then sell at the end of October for \(P_{A, t} = 41.29, P_{C, t} = 41.74\). Compute the simple monthly returns for the two stocks.

Note that the above prices were the actual closing prices for 2004 taken from
*Yahoo!*.

Instructions

**100 XP**

- Assign to
`PA`

a vector that contains the prices of the Amazon stock. - Assign to
`PC`

a vector that contains the prices of the Costco stock. - Compute the simple monthly return on the Amazon stock and assign it to
`RA`

. - Compute the simple monthly return on the Costco stock and assign it to
`RC`

.