Chapter 03 · Section 3.1

Volatility

During the last 4 months we observed the following stock prices:

         Oct.   Nov.   Dec.   Jan.   Feb.
Stock X   95     97     98     99    100
Stock Y   95    125     70    145    100

Is the following statement true? "The volatility of stock X is greater than the volatility of stock Y." Please answer with yes or no.

Volatility measures the magnitude of price movements. If a stock moves sharply we say it is volatile.