A)
Month
|
|
Price
|
|
|
|
|
S&P 500
|
XYZ Corp
|
2015
|
|
|
|
|
|
May
|
|
1,631
|
74.84
|
|
June
|
|
1,606
|
74.49
|
|
July
|
|
1,686
|
77.94
|
|
August
|
|
1,633
|
72.98
|
|
September
|
|
1,682
|
73.96
|
|
October
|
|
1,757
|
76.75
|
|
November
|
|
1,806
|
81.01
|
|
December
|
|
1,848
|
78.69
|
2016
|
January
|
|
1,783
|
74.68
|
|
February
|
|
1,859
|
74.70
|
|
March
|
|
1,872
|
76.43
|
|
April
|
|
1,884
|
79.71
|
|
May
|
|
1,924
|
76.77
|
|
June
|
|
1,960
|
75.07
|
|
July
|
|
1,931
|
73.58
|
|
August
|
|
2,003
|
75.50
|
|
September
|
|
1,972
|
76.47
|
|
October
|
|
2,018
|
76.27
|
|
November
|
|
2,068
|
87.54
|
|
December
|
|
2,059
|
85.88
|
2017
|
January
|
|
1,995
|
84.98
|
|
February
|
|
2,105
|
83.93
|
|
March
|
|
2,068
|
82.25
|
|
April
|
|
2,086
|
78.05
|
|
May
|
|
2,128
|
75.86
|
The Table shows the historical price data for S&P 500 index and XYZ Corp for 25 months. Use the data to calculate the average monthly holding period returns and the standard deviation of these returns for the S&P and XYZ.In a couple of sentences comment on the relationship between the 2 data series.
B)
On July 14, 2021, Federal Reserve Chair, Jerome Powell, presented the Fed's latest Monetary Policy Report to the Committee on Financial Services of the U.S. House of Representatives. The following are key economic highlights:
·
·Real gross domestic product this year appears to be on track to post its fastest rate of increase in decades.
·-Household spending is rising at an especially rapid pace, boosted by strong fiscal support, accommodative financial conditions, and the reopening of the economy.
·-Housing demand remains very strong.
·-Overall business investment is increasing at a solid pace.
·-Supply constraints have been restraining activity in some industries, most notably in the motor vehicle industry, where the worldwide shortage of semiconductors has sharply curtailed production so far this year.
·-Conditions in the labor market have continued to improve, but there is still a long way to go. Labor demand appears to be very strong; job openings are at a record high, hiring is robust, and many workers are leaving their current jobs to search for better ones. However, the unemployment rate remained elevated in June at 5.9 percent. The Labor force participation rate has not moved up from the low rates that have prevailed for most of the past year.
·-Job gains should be strong in coming months as public health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down diminish.
·-The pandemic-induced declines in employment last year were largest for workers with lower wages and for African Americans and Hispanics. Despite substantial improvements for all racial and ethnic groups, the hardest-hit groups still have the most ground left to regain.
·
·-Inflation has increased notably and will likely remain elevated in coming months before moderating.
-Inflation is being temporarily boosted by strong demand in sectors where production bottlenecks or other supply constraints have limited production. This should partially reverse as the effects of the bottlenecks unwind. Prices for services that were hard hit by the pandemic have also jumped in recent months as demand for these services has surged with the reopening of the economy.
o
·-Financial investor risk appetite has increased.
·
Which of these economic indicators do you think will have a strong impact on the financial sector over the next year?. Provide about 6-10 sentences in explaining
your choices
.