Answer a.
Average Return = [0.1474 + 0.0880 + 0.1331 + 0.2750 + 0.0715] /
5
Average Return = 0.7150 / 5
Average Return = 0.1430 or 14.30%
The average realized return on Blue Moose Producer’s stock from 2013 to 2017 was 14.30%
Answer b.
Expected Return = 0.20 * 0.15 + 0.35 * 0.09 + 0.45 *
(-0.12)
Expected Return = 0.0075
Variance = 0.20 * (0.15 - 0.0075)^2 + 0.35 * (0.09 - 0.0075)^2 +
0.45 * (-0.12 - 0.0075)^2
Variance = 0.01375875
Standard Deviation = (0.01375875)^(1/2)
Standard Deviation = 0.1173 or 11.73%
Attempts: 0 Average: 12 5. The probabilistic approach to calculate expected returns Investors are willing to...
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5. The probabilistic approach to calculate expected returns Aa Aa Investors are willing to make investments because they expect a return from doing so. As the name suggests, expected returns are not assured. Because they occur in the future, expected returns cannot be observed either, so stock analysts substitute historical realized returns in their mathematical analyses Realized return is the name for returns that have actually been earned. Many analysts use past realized returns to both predict future...
Please answer
5. The probabilistic approach to calculate expected returns Aa Aa Investors are willing to make investments because they expect a return from doing so. As the name suggests, expected returns are not assured. Because they occur in the future, expected returns cannot be observed either, so stock analysts substitute historical realized returns in their mathematical analyses Realized return is the name for returns that have actually been earned. Many analysts use past realized returns to both predict future...
Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Blue Llama Mining Inc. (BLM): Five years of realized returns for BLM are given in the following table. Remember: 1. While BLM was started 40 years ago, its common stock has been publicly traded for the past 25 years....
Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Blue Ulama Mining Inc. (BLM): Five years of realized returns for BLM are given in the following table. Remember: 1. While BLM was started 40 years ago, its common stock has been publicly traded for the past 25 years....
3. Measuring standalone risk using realized (historical) data Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Blue Llama Mining Inc. (BLM): Five years of realized returns for BLM are given in the following table. Remember: 1. While BLM was started 40 years ago, its common stock has...
2. Measuring standalone risk using realized data Aа Aa Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock Consider the case of Blue Llama Mining Inc. (BLM): Five years of realized returns for BLM are given in the following table. Remember: 1. While BLM was started 40 years ago, its common stock...
Realized returns on Green Hamster Manufacturing Inc. are given in the following table: 2013 16.08% 2014 9.60% 2015 14.52% 2016 30.00% 2017 7.80% Stock Return The average realized return on Green Hamster Manufacturing Inc.'s stock from 2013 to 2017 was Based on economic conditions, you compiled the following information with estimates of returns from Green Hamster Manufacturing Inc.'s stock and the probabilities associated with the economic condition for the next year: Market Condition Probability (p1) Green Hamster Manufacturing Inc. (rn)...
The cost of equity using the CAPM approach The current risk-free rate of return (RF) is 4.23%, while the market risk premium is 6.63%, the Burris Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Burris's cost of equity is The cost of equity using the bond yield plus risk premium approach The Lincoln Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's...
Calculate the expected rate of return on each alternative, and fill
in the blanks on the row for r in the previous table. PLEASE SHOW
YOUR WORK.
MERRILL FINCH INC. 8-23 RISK AND RETURN Assume that you ente job as a financial planner with Merrill Finch In ment is to invest $100,000 for a client. Because the 1 year you have been instructed to plan for you to the investment alternatives in the following outcomes. For now, disregard the items...
Attempts: Average: 15 S. The cost of retained earnings The cost of retained earnings The cost of raising capital through retained earings is the cost of raising capital through issuing new common stock. The cost of equity using the CAPM approach The yield on a three-month T-bills 39, the yield on a 10-year T-bond is 3.67%, the market risk premium beta of 0.B0. Using the Capital Asset Pricing Model (CAPM) approach, Wilson's cost of equity is 6.97% and the Wilson...