Question

Use the following scenario analysis for stocks X and Y to answer the questions.

	Bear	Normal	Bull
	Market	Market	Market
Probability	15.00%	50.00%	35.00%
Stock X	-13.00%	11.00%	28.00%
Stock Y	-26.00%	16.00%	46.00%

What is the standard deviation of return for stock Y? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Use the following scenario analysis for stocks X and Y to answer the questions.

	Bear	Normal	Bull
	Market	Market	Market
Probability	35.00%	55.00%	10.00%
Stock X	-28.00%	9.00%	30.00%
Stock Y	-16.00%	15.00%	50.00%

What is the standard deviation of return for stock X? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Use the following scenario analysis for stocks X and Y to answer the questions.

	Bear	Normal	Bull
	Market	Market	Market
Probability	35.00%	55.00%	10.00%
Stock X	-28.00%	9.00%	30.00%
Stock Y	-16.00%	15.00%	50.00%

What is the standard deviation of return for stock X? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

STANDARD DEVIATION : SECURITY Y = 23.71, SECURITY X = 13.49

w v * 05:11 ENG 27-01-2020 ENG 2 6 K178 KC KD KE KF KG KH KIK KK KLKM KN KO KPKQ FOR SECURITY Y EXPECTED RETURN= E(r) = E(r) = sum of (prob x return) (0.15 X -26%) + (0.5 X 16%) +(0.35 X 46%) = 20.20% VARIANCE = Var(r) = Var(r) = sum of (prob x (return - E(r ))^2) (0.15 X (-26%-20.20%)^2)+(0.5 X (16%-20.20%)^2)+ (0.35 X (46%-20.20%)^2) = 5.6196% ANSWER SD(r) = SQRT(Var(r)) = 23.71% (SQRT(5.6196%] FOR SECURITY X EXPECTED RETURN= E(r) = E(r) = sum of (prob x return) (0.15 X-13%) + (0.5 X 11%) + (0.35 X 28%) = 13.35% VARIANCE = Var(r) = Var(r) = sum of (prob x (return - E(r ))^2) (0.15 X (-13%-13.35%)^2)+(0.5 X (11%-13.35%)^2) + (0.35 X (28%-13.35%)^2) = 1.8203% ANSWER SD(r) = SQRT(Var(r)) = 13.49% (SQRT(1.8203%] 78 capm-portfolio retirement futures margin PV, FV, ANNUITY ACC CVP KE BOND HPR REALISED YIELD NPV RAK ROE std costing EPS%, ECONOMY ... :