Q2-Compute the E(return) for the stock of Corporation whose data of expected return of the stocks...
(Expected rate of return and risk) Summerville Inc. is considering an investment in one of two common stocks. Given the which investment is better, based on the risk (as measured by the standard deviation) information in the popup window: E and return of each? 96 (Round to two decimal places) a. The expected rate of return for Stock A is ]%. (Round to two decimal places) The expected rate of return for Stock B is b. The standard deviation for...
Probability of State of Economy State of Economy Return of Stock A Return of Stock B 0.20 Bear 0.05 -0.05 0.40 Normal 0.07 0.10 0.40 Bull 0.10 0.20 A) Calculate the expected return for each stock. B) What is the correlation between the returns of the two stocks? C) Assume the market has an expected return of 10% and a standard deviation of 20%. Also, ρB,M = 0.8. Calculate Beta for Stock B.
Question 2: Given three securities: Expected Standard Return Deviation Stock 10.15 0.20 Stock 20.20 0.30 Stock 30.08 0.10 Stock 3 Correlation of Returns Stock 1 Stock 2 1.00 0.20 0.30 1.00 0.80 1.00 (a) Find the expected return and standard deviation of a portfolio with 25% in stock 1, 50% in stock 2, and 25% in stock 3. (b) For the portfolio in part (a), find the covariance of its return with the return of an equally weighted portfolio of...
letter b please You have estimated the following probability distribution of returns for two stocks: Stock N Stock O Probability 0.20 0.30 Return 8% Probability 0.20 0.30 0.30 Return 26% 12 0.30 0.20 -4 0.20 -4 Calculate the expected rate of return and standard deviation for cach stock If the correlation between the returns on the two stocks is -0.40, calculate the portfolio returm and the standard deviation for portfolios containing 100%, 75 % , 50 % , 25 %...
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%
INCIPLES OF FINANCE Problem 6-6 Standard deviation Given the following information, calculate the expected return for the portfolio and the standard deviation. SHOW your work. DATA Probability Returns 0.40 5% 0.30 7% 0.20 12% 0.10 20% os ACET
Returns for Stocks A and Stock B have the following distribution: Probability Rate of Return Stock A Rate of Return Stock B 0.20 +16% -10% 0.30 +10% -6% 0.50 -30% +40% a) What is the Expected Return for Stock A? b) What is the Standard Deviation for Stock A? c) What is the Expected Return for Stock B? d) What is the Standard Deviation for Stock B? e) What is the Expected Return for a Portfolio with an equal 50%...
The table below shows the one-year return distribution for RCS stocks. Possible Return Ri Probability pi -40% 0.10 -20% 0.20 0% 0.15 20% 0.25 40% 0.30 (a) The expected return is: %. (Round to two decimal places.) (b) The standard deviation is: %. (Round to two decimal places.)
Question 6 (1 point) A stocks rate of return in year 1 is 0.0 in year 2 is 0.4, and in year 3 is 0.1. What is the stock annual arithmetric average return? Your Answer: Answer Question 7 (1 point) A stocks rate of return in year 1 is 0.1, in year 2 is -0.4, and in year 3 is 0.3. What is the stock annual geometric return? Your Answer: Answer Question 8 (1 point) Milo Corporation has a Beta...
Three-stock Portfolio The information regarding a portfolio consisting of three stocks is given below. Stock A Stock B Stock C E(R) 15% 21% Standard Deviation 10% 30% Weight 0.30 0.30 17% 14% 0.40 The correlation coefficient between Stocks A and B is 0.27. The correlation coefficient between Stocks A and C is 0.67. The correlation coefficient between Stocks B and C is 0.12. What is the expected return of the portfolio? Select one: o a. 12.54% b. 10.68% c. 17.60%...