An analyst estimates there is a probability of 20 percent that there will be a recession...
An analyst estimates there is a probability of 20 percent that there will be a recession next year. He thinks the probability of things being normal is three times the probability of a recession, with the remaining probability assigned to a boom taking place. A stock is expected to return -14 percent in a recession, 7 percent under normal conditions and 21 percent if there is a boom. What is the expected return (in percent) on this stock? Answer to two decimals, carry intermediate calcs. to four decimals. Thank you!!
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![Returns (n) -14.00% 7.00% 21.00% Probability [(P(r)] 0.20 0.60 0.20 Expected return [rxP(r)=u] -2.80% 4.20% 4.20% Expected re](http://img.homeworklib.com/questions/81ebfe20-77ab-11ea-8dc5-cb05821acf66.png?x-oss-process=image/resize,w_560)
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An analyst estimates there is a probability of 20 percent that
there will be a recession...
Ex-Ante Standard Deviation An analyst estimates a 20% probability of a recession next year, a 44%...
Ex-Ante Standard Deviation An analyst estimates a 20% probability of a recession next year, a 44% probability of normal economic growth and a 36% probability of a strong recovery. If a recession occurs a stock is projected to have a -15.5% return. With normal growth the stock will generate a 10.5% return and if the strong recovery occurs the stock will have a 25.5% rate of return. This stock's standard deviation is _______. 11.65% 10.70% 14.70% 11.92%
Check There is 6 percent probability of recession, 21 percent probability of a poor economy, 47...
Check There is 6 percent probability of recession, 21 percent probability of a poor economy, 47 percent probability of a normal economy, and 26 percent probability of a boom. A stock has returns of -20.8 percent, 4.4 percent, 12.2 percent and 27.9 percent in these states of the economy, respectively. What is the stock's expected return? points
Ex-Ante Standard Deviation An analyst estimates a 19% probability of a recession next year, a 43%...
Ex-Ante Standard Deviation An analyst estimates a 19% probability of a recession next year, a 43% probability of normal economic growth and a 38% probability of a strong recovery. If a recession occurs a stock is projected to have a -15.4% return. With normal growth the stock will generate a 10.4% return and if the strong recovery occurs the stock will have a 25.4% rate of return. This stock's standard deviation is Multiple Choice 11.20% 11.76% 11.49% 14.54%
There is 7 percent probability of recession, 18 percent probability of a poor economy, 50 percent...
There is 7 percent probability of recession, 18 percent probability of a poor economy, 50 percent probability of a normal economy, and 25 percent probability of a boom. A stock has returns of −20.5 percent, 4.1 percent, 11.9 percent and 27.6 percent in these states of the economy, respectively. What is the stock's expected return?
State Boom Normal Growth Recession Probability 28 23 49 Return 535 20 17 Find the expected...
State Boom Normal Growth Recession Probability 28 23 49 Return 535 20 17 Find the expected return on the stock market. O.2624 O.1125 O2791 O.0958 6.25 points Save Answer QUESTION 4 What is the standard deviation of the market's expected return? Round intermediate steps and your final answer to four decimals and enter your answer in decimal format 6.25 points Save Answer QUESTION 5 Find the coefficient of variation. Round intermediate steps and your final answer to four decimals
Consider the following information: Probability of State of Economy State of Economy Recession Normal Boom Portfolio...
Consider the following information: Probability of State of Economy State of Economy Recession Normal Boom Portfolio Return If State Occurs - 17 21 46 33 26 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return
Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds...
Consider the following scenario analysis: Rate of ReturnScenarioProbabilityStocksBondsRecession0.20-5%14% Normal economy 0.60158Boom0.20 254Assume a portfolio with weights of .60 in stocks and .40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Do not round percent rounded to 1 decimal place.) Rate of Return Recession Normal economy Boomb. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as...
Stock A is expected to return 12 percent in a normal economy and lose 7 percent in a recession. Stock B is expected to r...
Stock A is expected to return 12 percent in a normal economy and lose 7 percent in a recession. Stock B is expected to return 8 percent in a normal economy and 2 percent in a recession. The probability of the economy being normal is 80 percent and the probability of a recession is 20 percent. What is the covariance of these two securities? Group of answer choices .003876 .004203 .003280 .004115
The common stock of Manchester & Moore is expected to earn 14 percent in a recession,...
The common stock of Manchester & Moore is expected to earn 14 percent in a recession, 7 percent in a normal economy, and lose 4 percent in a booming economy. The probability of a boom is 15 percent while the probability of a recession is 5 percent. What is the expected rate of return on this stock? a. What is the expected rate of return on this stock? 5.7% b. What is the variance of the returns on this stock?...
consider the following information state of economy recession probability of state of economy .18 rate of...
consider the following information state of economy recession
probability of state of economy .18 rate of return if state occurs
stock a .09
Problem 13-7 Calculating Returns and Standard Deviations [LO1] Consider the following information Rate of Return If State Occurs State of Probability of State of Economy 18 Economy Stock A Stock B Recession 09 -13 Normal Boom 59 12 17 16 23 33 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations...
Check There is 6 percent probability of recession, 21 percent probability of a poor economy, 47 percent probability of a normal economy, and 26 percent probability of a boom. A stock has returns of -20.8 percent, 4.4 percent, 12.2 percent and 27.9 percent in these states of the economy, respectively. What is the stock's expected return? points
State Boom Normal Growth Recession Probability 28 23 49 Return 535 20 17 Find the expected return on the stock market. O.2624 O.1125 O2791 O.0958 6.25 points Save Answer QUESTION 4 What is the standard deviation of the market's expected return? Round intermediate steps and your final answer to four decimals and enter your answer in decimal format 6.25 points Save Answer QUESTION 5 Find the coefficient of variation. Round intermediate steps and your final answer to four decimals
Consider the following information: Probability of State of Economy State of Economy Recession Normal Boom Portfolio Return If State Occurs - 17 21 46 33 26 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return
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consider the following information state of economy recession
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stock a .09
Problem 13-7 Calculating Returns and Standard Deviations [LO1] Consider the following information Rate of Return If State Occurs State of Probability of State of Economy 18 Economy Stock A Stock B Recession 09 -13 Normal Boom 59 12 17 16 23 33 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations...
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