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An analyst has predicted the following returns for Stock A and Stock B in three possible...
An analyst has predicted the following returns for Stock A and Stock B in three possible states of the economy. State Probability A Boom Normal Recession 0.24 0.27 0.49 0.16 0.20 0.10 0.17 0.25 a. What is the probability of a recession? (Round your answer to 2 decimal places.) Probability 0.26 b. Calculate the expected return for Stock A and Stock B. (Round your answers to 2 decimal places) Expected Return Stocks A Stocks B c. Calculate the expected return...
An anaryst nas preaictea tne Toiiowing returns tor Stock A ana StocK tb in three possioie states or the economy. Boom Normal Recession 0.25 0.49 0.24 0.27 0.16 0.20 0.10 0.17 a. What is the probability of a recession? (Round your answer to 2 decimal places) Answer is complete and correct. Probability 0.26 b. Calculate the expected return for Stock A and Stock B. (Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Expected Stocks...
probabilty rate of returnrecession 0.11 -4%normal 0.4 11%boom 0.49 15%expected return = 11.31standard deviation = 5.70Q: The investor decides to diversify by investing $3,000 in Gryphon stock and $2,000 in Royal stock, which has an expected return of 5.5% and a standard deviation of 9.4%. The correlation coefficient for the two stocks' returns is 0.8. Calculate the expected return and standard deviation of the portfolio. Round your answers to 2 decimal places.
You have predicted the following returns for stocks A and B in three possible states of nature What is expected return for stock A? State Probability A Boom 01 0.20 0.30 Normal 0.4 0.10 0.20 Recesion 0.5 0.05 0.07 Select one: a 95% b. 8.7% 10.5% d. 8.5%
You have predicted the following returns for stocks A and B in three possible states of nature. What is expected return for stock A? State Probability A B Boom 0.1 0.20 0.30 Normal 0.4 0.10 0.20 Recesion 0.5 0.05 0.07 Select one: a. 8.5% b. 10.5% c. 8.7% d. 9.5%
An investor is considering the purchase of Gryphon stock, which has returns given in the table below. Scenario Probability Rate of Return Recession 0.27 2% Normal 0.58 9% Boom 0.15 14% Calculate the expected return and standard deviation of Gryphon. Round your answers to 2 decimal places. Enter your answers below. E(r) = Correct response: 7.86 % Std. Dev. = Correct response: 3.96±0.01 % The investor decides to diversify by investing $8,000 in Gryphon stock and $7,000 in Royal stock...
Problem 7. [9 pts]. Stock A and B have the following returns: (Show your calculations) Stock A 0.10 0.17 0.05 -0.05 -0.08 0.09 0.10 0.14 Stock B -0.03 0.10 0.05 0.15 0.12 -0.05 0.07 0.05 4 6 a- What are the expected returns of the two stocks? b- What are the standard deviations of the two stocks? c- If their correlation is-0.49, what is the expected return and standard deviation of a portfolio of 35% stock A and 65% stock...
Problem 7. [9 pts]. Stock A and B have the following returns: (Show your calculations Stock A 0.10 0.17 0.05 0.05 -0.08 0.09 0.10 0.14 Stock B 0.03 0.10 0.05 0.15 0.12 0.05 0.07 0.05 a- What are the expected returns of the two stocks? b- What are the standard deviations of the two stocks? c- If their correlation is -0.49, what is the expected return and standard deviation of a portfolio of 35% stock A and 65% stock B?
Question 2 (1 point) Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.10 and 0.17, respectively. (Round your answer to 4 decimal places. For example .1244) Probability Return(A) Return(B) Good 0.35 0.30 0.50 OK 0.50 0.10 0.10 Poor 0.15 -0.25 -0.30 Your Answer: Question 2 options: Answer Question 3 (1...
Suppose you have predicted the following returns for Apple Inc. stock in three possible states of nature. What is the expected return to Apple Inc.? State Probability of State Apple Inc. Returns Boom 0.4 - 0.12 Normal 0.3 0.06 Bust 0.27