What is the standard deviation of the returns on a stock given the following information?
State of Economy |
Probability of State of Economy |
Rate of Return if State Occurs |
Boom |
.28 |
.175 |
Normal |
.67 |
.128 |
Recession |
.05 |
.026 |
Group of answer choices
3.42 percent
4.01 percent
3.89 percent
3.28 percent
3.57 percent
State of Economy | Probability of state of Economy |
Rate of return if state occurs |
Boom | 0.28 | 0.175 |
Normal | 0.67 | 0.128 |
Recession | 0.05 | 0.026 |
Expected rate of return when the probabilities (pi) of state of Economies are given is calculated using the formula:
Expected Return = E[R] = p1*R1 + p2*R2 + p3*R3 = 0.28*0.175 + 0.67*0.128 + 0.05*0.026 = 0.049 + 0.08576 + 0.0013 = 0.13606
Expected Return = E[R] = 0.13606
Now, Varicance is calculated using the formula:
Variance = σ2 = p1*(R1-E[R])2 + p2*(R2-E[R])2 + p3*(R3-E[R])2
Varince = σ2 = 0.28*(0.175-0.13606)2 + 0.67*(0.128-0.13606)2 + 0.05*(0.026-0.13606)2 = 0.000424570608 + 0.0000435256119999998 + 0.00060566018 = 0.0010737564
Standard Deviation is square-root of variance
Standard Deviation = σ = (0.0010737564)1/2 = 0.0327682224113546 = 3.27682224113546% ~ 3.28% (Rounded to two-decimals)
Answer -> 3.28 percent
What is the standard deviation of the returns on a stock given the following information? State...
What is the standard deviation of the returns on a stock given the following information? State of Economy Boom Normal Recession Probability of State of Economy .28 Rate of Return if State Occurs - 175 - 128 - 026 - 67 - 05 Multiple Choice Ο O 3.57 percent Ο O 328 percent Ο 3.89 percent Ο 3.42 percent Ο Ο 3.57 percent Ο 3.28 percent Ο 3.89 percent Ο C) 3.42 percent Ο 4.01 percent
What is the standard deviation of the returns on a stock given the following information? State of Economy Boom Normal Recession Probability of State of Economy .28 .67 .05 Rate of Return if State Occurs . 175 .128 .026 Multiple Choice 0 3.57 percent 3.28 percent 313 Risk and Return i Saved Help Save & Exit Submit o 3.57 percent o 3.28 percent o 3.89 percent o 3.42 percent o 4.01 percent
Based on the following information, what is the standard deviation of returns? State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .23 − .091 Normal .46 .106 Boom .31 .216
Based on the following information, what is the standard deviation of returns? State of Economy Recession Normal Boom Probability of State of Economy .30 .33 .37 Rate of Return if State Occurs -.104 .119 .229 Multiple Choice 19.31% 0 13.68% 13.68% 24.95%
Based on the following information, what is the standard deviation of returns? State of Economy Recession Normal Boom Probability of State of Economy .27 .42 .31 Rate of Return if State Occurs -.095 .110 .220 Multiple Choice 12.10% 14.65% 19.53% 21.30% 15.82%
What is the standard deviation of the returns on a portfolio that is invested in Stocks A, B, and C? Twenty percent of the portfolio is invested in Stock A and 35 percent is invested in Stock C. Probability of State of Rate of Return State of Economy Economy if State Occurs Stock Stock A Stock B Boom 04 .17 .09 .09 Normal .81 .08 .06 Recession .15 - 24 .02 - a. 3.28% O b. 4.91% OC 5.65% O...
Calculate the expected return and standard deviation for the following single stock: State of economy Probability of state of economy Return if state of economy occurs Recession .15 .02 Normal .25 .08 Boom .60 .12 The expected return and standard deviation, respectively, are: 9.8%, 2.95% 7.33%, 4.18% 9.50%, 3.57% 9.50%, 4.18% 7.33%, .1275%
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) State of Economy Probability of State of Economy 0.45 0.40 0.15 Security Return if State Occurs -5.00% 12.00 16.00 Recession Normal Boom Standard deviation
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) State of Economy Probability of State of Economy Security Return if State Occurs Recession .35 −5.50 % Normal .20 12.00 Boom .45 19.00
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Probability State of Economy of Security Return if State Occurs -10.00% 15.00 21.00 State of Economy 0.50 0.45 0.05 Recession Normal Boom Answer is complete but not entirely correct. Standard deviation 15.29 $ %