Would an investor rather have an investment with a coefficient of variation of 2 or 3,...
Would an investor rather have an investment with a coefficient of variation of 2 or 3, or would the investor be indifferent between the two choices?
Homework Answers
Coefficient of variation tells the level dispersion around the mean. It is the ratio of standard deviation and mean. An investor who is risk averse will choose investment with lower coefficient of variation i.e. 2, because it will have lower volatility. Where as a risk seeker will choose investment with higher volatility i.e higher coefficient of variation 3 .
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Would an investor rather have an investment with a coefficient
of variation of 2 or 3,...
4 parts of a worksheet that I need help with please. 8-1 Risk-Return Trade-Off The price...
4 parts of a worksheet that I need help with please.
8-1 Risk-Return Trade-Off The price of a stock today is $33/share. In one year, the stock will be worth $28/share and give a $2/share dividend. What is the total return on the stock? 8-2b Measuring Stand-Alone Risk: The Standard Deviation Calculate the standard deviation for a stock given the information on three different economic scenarios: Probability of Outcome 0.3 Return in Given Outcome Recessiorn Average Boom -5% 8% 0.6...
Normal Chapter& 8-1 Risk-Return Trade-ofr The prie f sock today i $3dhare. In one year, the...
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The coefficient of variation measures how risky an asset is per unit of return, and therefore...
The coefficient of variation measures how risky an asset is per unit of return, and therefore it can be used to help an investor choose between assets with different returns and different standard deviations (risk). Group of answer choices True False
why would an investor choose to exchange a property rather than just keep what they already...
why would an investor choose to exchange a property rather than just keep what they already have?
QUESTION 28 The expected returns, standard deviation, and coefficient variation of Stocks A and B are...
QUESTION 28 The expected returns, standard deviation, and coefficient variation of Stocks A and B are given below. If you are risk adverse investor, which stock will you buy? | Stocks | Expected Return Std. Deviation Coefficient Variation, CV A 15% 4% 0.27 B 12% 3% 0.25 O Stock A since expected return is higher Stock B since standard deviation is lower O Stock A since coefficient variation is higher Stock B since coefficient variation is lower O Need additional...
Highland Investment, a venture investor, is considering investing in a software venture opportunity. However, the rate o...
Highland Investment, a venture investor, is considering investing in a software venture opportunity. However, the rate of return to be realized next year is likely to vary with the economic climate that actually occurs. Following are three possible economic outcomes, the probability that each one will occur, and the rate of return projected for each outcome: Economic Probability of Rate of Climate Occurrence Return Recession .25 -20.0% Normal .50 15.0% Rapid Growth ...
a. Under what circumstances would you (as an investor) prefer to receive cash dividends rather than...
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Question 20 5 pts An investor having a risk aversion coefficient (A) equal to 1.5 is...
Question 20 5 pts An investor having a risk aversion coefficient (A) equal to 1.5 is considering three portfolios of varying risk and return as shown in the table below. Assuming a risk-free rate equal to 4%, which statement below is CORRECT? Investment Table Portfolio Return Volatility Sharpe Ratio Low Risk 7% 10% 0.30 Medium Risk 10% 20% 0.30 High Risk 13% 30% 0.30 Utility of High Risk Portfolio -6.25% of the three portfolios, the Medium Risk portfolio provides the...
(W6C6.11.15) (T/F) The typical investor is indifferent regarding risk and investment. These investors do not need...
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Alternative Bond Investments and Investor Objectives Bonds can serve multiple objectives of an investor. A bond...
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4 parts of a worksheet that I need help with please.
8-1 Risk-Return Trade-Off The price of a stock today is $33/share. In one year, the stock will be worth $28/share and give a $2/share dividend. What is the total return on the stock? 8-2b Measuring Stand-Alone Risk: The Standard Deviation Calculate the standard deviation for a stock given the information on three different economic scenarios: Probability of Outcome 0.3 Return in Given Outcome Recessiorn Average Boom -5% 8% 0.6...
Normal Chapter& 8-1 Risk-Return Trade-ofr The prie f sock today i $3dhare. In one year, the stock allbe worth $28/share and give a Bond's price after a year (28)-Bond's price today (33)-5 Dividends (2)-5+2--3 Total return on stock (-3/33-00909-) 9.09% 8-2a Statistical Measures of Stand-Alone Risk What would the stand-alone risk for a Treasury bill be (.e high, medium, low, none, etc.)? Low 8-2b Measuring Stand-Alone Risk: The Standard Deviation Calculate the standard deviation for a stock given the information...
QUESTION 28 The expected returns, standard deviation, and coefficient variation of Stocks A and B are given below. If you are risk adverse investor, which stock will you buy? | Stocks | Expected Return Std. Deviation Coefficient Variation, CV A 15% 4% 0.27 B 12% 3% 0.25 O Stock A since expected return is higher Stock B since standard deviation is lower O Stock A since coefficient variation is higher Stock B since coefficient variation is lower O Need additional...
Question 20 5 pts An investor having a risk aversion coefficient (A) equal to 1.5 is considering three portfolios of varying risk and return as shown in the table below. Assuming a risk-free rate equal to 4%, which statement below is CORRECT? Investment Table Portfolio Return Volatility Sharpe Ratio Low Risk 7% 10% 0.30 Medium Risk 10% 20% 0.30 High Risk 13% 30% 0.30 Utility of High Risk Portfolio -6.25% of the three portfolios, the Medium Risk portfolio provides the...
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