EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.2 (15%) (36%) 0.2 3 0 0.3 10 21 0.2 22 30 0.1 33 47 a. Calculate the expected rate of return, rB, for Stock B (rA = 8.30%.) Do not round intermediate calculations. Round your answer to two decimal places. ________ % b. Calculate the standard deviation of expected returns, σA, for Stock A (σB = 26.39%.) Do not round intermediate calculations. Round your answer to two decimal places. ________ % c. Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places. ________ d. Is it possible that most investors might regard Stock B as being less risky than Stock A? I. If Stock B is more highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be less risky in a portfolio sense. II. If Stock B is more highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. III. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense. IV. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. V. If Stock B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense. _________________
EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: Probability...
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.2 (9%) (22%) 0.2 5 0 0.3 11 20 0.2 20 30 0.1 40 36 A- Calculate the expected rate of return, rB, for Stock B (rA = 10.50%.) Do not round intermediate calculations. Round your answer to two decimal places. % B- Calculate the standard deviation of expected returns, σA, for Stock A (σB = 20.02%.) Do not round intermediate calculations. Round your...
EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (13%) (35%) 0.2 5 0 0.3 12 20 0.3 18 29 0.1 38 38 Calculate the expected rate of return, rB, for Stock B (rA = 12.50%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 20.35%.) Do not round intermediate calculations. Round your...
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (13 %) (22 %) 0.2 6 0 0.5 16 21 0.1 23 27 0.1 39 45 Calculate the expected rate of return, , for Stock B ( = 14.10%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 17.44%.) Do not round intermediate calculations. Round your...
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (8 %) (40 %) 0.2 4 0 0.4 14 19 0.2 18 29 0.1 38 45 Calculate the expected rate of return, , for Stock B ( = 13.00%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 21.95%.) Do not round intermediate calculations. Round your...
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (10 %) (35 %) 0.1 3 0 0.5 12 23 0.2 20 25 0.1 30 36 Calculate the expected rate of return, , for Stock B ( = 12.30%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 19.13%.) Do not round intermediate calculations. Round your answer...
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (14 %) (30 %) 0.1 2 0 0.5 13 20 0.2 24 29 0.1 36 45 Calculate the expected rate of return, , for Stock B ( = 13.70%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 19.01%.) Do not round intermediate calculations. Round your...
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (7 %) (22 %) 0.2 5 0 0.5 14 19 0.1 22 27 0.1 30 36 Calculate the expected rate of return, for Stock B ( = 12.50%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 15.70%.) Do not round intermediate calculations. Round your answer...
EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: Probability 0.1 (38%) 0.2 0.2 0.1 a. Calculate the expected rate of return, re, for Stock B (rA = 12.00%.) Do not round intermediate calculations. Round your answer to two decimal places. b. Calculate the standard deviation of expected returns, OA, for Stock A (OB = 20.49%.) Do not round intermediate calculations. Round your answer to two decimal places. % c. Now calculate the coefficient...
Problem 8-6 Expected returns Stocks A and B have the following probability distributions of expected future returns: Probability -20% 0.2 0.2 a. Calculate the expected rate of return, rb, for Stock B (rA = 14.50%.) Do not round intermediate calculations. Round your answer to two decimal places. b. Calculate the standard deviation of expected returns, OA, for Stock A (OB = 20.06%.) Do not round intermediate calculations. Round your answer to two decimal places. C. Now calculate the coefficient of...
Stocks A and B have the following probability distributions of expected future returns: Probability 0.1 (8 %) (35%) 0.2 0.4 22 0.2 0.1 a. Calculate the expected rate of return, fb, for Stock B (f = 12.00%.) Do not round intermediate calculations. Round your answer to two decimal places. 28 b. Calculate the standard deviation of expected returns, CA, for Stock A (OB = 20.40%.) Do not round intermediate calculations. Round your answer to two decimal places. % Now calculate...