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Expected Returns: Discrete Distribution The market and Stock J have the following probability distributions: Probability rM...

Expected Returns: Discrete Distribution

The market and Stock J have the following probability distributions:

Probability rM rJ
0.3 15% 18%
0.4 9 7
0.3 20 11
  1. Calculate the expected rate of return for the market. Round your answer to two decimal places.
    %

    Calculate the expected rate of return for Stock J. Round your answer to two decimal places.
    %
  2. Calculate the standard deviation for the market. Round your answer to two decimal places.
    %

    Calculate the standard deviation for Stock J. Round your answer to two decimal places.
    %
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Answer #1

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Home nert Page Layout Formulas Data Review View dd-Ins Σ AutoSum 11 -A Wrap Text General Calibri ー E ゴText ta copy. в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format Formatz Paste Sort &Find & Format Painter B Formattng as Table styies 2 ClearFe Select Edting Clipboard NC133 MU Font Styles MW MY NA NB NG A 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 11 1 ト capm-portfolio, retirement futures EXPECTED market RETURN (M)Er) p (r-E(r))A2 EXPECTED RETURN FOR MARKET FOR STOCK prob (p) return (r) pxr 15.0 14.10 % 11.50 % 0.3 0.4 0.3 0.900 5.100 5.900 14.10 variance (M) 4.50 0.24 10.40 10.44 21.090o 4.592 20.0 6.00 STANDARD DEVIATION FOR MARKET FOR STOCK E(r) 4.59 % 4.57 % SD(M) EXPECTED stock RETURN ()E(r prob (p) return (r) px r 0.3 18.0 0.3 11.0 E(r) 6.500 -4.500 -0.500 11.50 variance) 20.8500 5.40 2.80 3.30 12.68 8.10 0.08 0.4 7.0 SD(U) 4.566 margr , pv,F, ANNUITY ACC CVPXE BOND HPR REALISED YIELD -NPV RDE-std cost ng EPS%, ECONOM BEFOR AFTER BUYBACK-Shei 04:06 26-01-2019

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