Homework Answers
Solution:
given
probabilities to possible changes in the stock price over the next year.
(a) expected change in stock price, or E(Y):
E(Y) = 15* 0.1 + 5* 0.35 + 0* 0.35 - 5 * 0.15 - 15* 0.05
= 1.5 + 1.75 + 0 - 0.75 - 0.75
= 1.5 + 1.75 - 1.5
E(Y) = 1.75 ( % )
(b) probability that the stock price falls is:
from given values
at 0.05 the probability stock price falls to the least -15
Add Answer to:
In considering the purchase of a certain stock (Y), suppose you attach the following probabilities to...
(All answers were generated using 1,000 trials and native Excel functionality.) Suppose that the price of a share of a particular stock listed on the New York Stock Exchange is currently $39....
(All answers were generated using 1,000 trials and native Excel functionality.) Suppose that the price of a share of a particular stock listed on the New York Stock Exchange is currently $39. The following probability distribution shows how the price per share is expected to change over a three- month period: Probability 0.05 0.10 0.25 0.20 0.20 Stock Price Change ($) 2 2 0 +1 +2 price per share is expected to change over a three- month period: Stock Price...
10. You are considering the purchase of a common stock that just paid a dividend of...
10. You are considering the purchase of a common stock that just paid a dividend of $2.00. You expect this stock to have a growth rate of 30 percent for the next 3 years, then to have a long-run normal growth rate of 10 percent thereafter. If you require a 15 percent rate of retum, how much should you be willing to pay for this stock? a. $97.50 b. $62.68 c. $82.46 d. $79.15 e. $71.27 11. You are given...
Problem 12-05 (Algorithmic) the New York Stock Exchange is currently $40. The following probability distribution shows...
Problem 12-05 (Algorithmic) the New York Stock Exchange is currently $40. The following probability distribution shows how the price per share is expected to change over a three-month perlod: The price of a share of a particular stock listed Stock Price Change ($) Probability o.10 -3 .10 .20 0.15 0.15 1 0.20 0.10 f random numbers that can be used to generate the change in stock price over a three-month period. If required, round your answers to two decimal places....
Question 2 (1 point) Given the returns and probabilities for the three possible states listed here,...
Question 2 (1 point) Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.10 and 0.17, respectively. (Round your answer to 4 decimal places. For example .1244) Probability Return(A) Return(B) Good 0.35 0.30 0.50 OK 0.50 0.10 0.10 Poor 0.15 -0.25 -0.30 Your Answer: Question 2 options: Answer Question 3 (1...
4.23 Suppose that X and Y have the following joint probability function: 1 0.10 0.15 y|...
4.23 Suppose that X and Y have the following joint probability function: 1 0.10 0.15 y| 3 | 0.20 0.30 5 0.10 0.15 (a) Find the expected value of g(x, Y) XY2 (b) Find μχ and μΥ.
Albert estimates that there are three possible return outcomes for a stock he is considering for...
Albert estimates that there are three possible return outcomes for a stock he is considering for purchase. He thinks that there is a 35% chance the economy will boom and his stock will return 25%, a 50% chance the economy will continue at its current pace and the stock will return 8%, and finally, that there is a 15% chance that the economy will falter and the expected return on his stock will be -10%. Given these probabilities and conditional...
The price of a share of stock is currently $39. The following probability distribution shows how...
The price of a share of stock is currently $39. The following probability distribution shows how the price per share is expected to change over a 3-month period: Price Change ($) Probability -2 0.05 - 1 0.10 0 0.25 +1 0.35 +2 0.25 If you were to set up a table for random sampling from this distribution using VLOOKUP on Excel, what price change would you generate using a random number of 0.6568? a) +1 b) 0 c) +2 d)...
An individual who has automobile insurance from a certain company is randomly selected. Let Y be...
An individual who has automobile insurance from a certain company is randomly selected. Let Y be the number of moving violations for which the individual was cited during the last 3 years. The pmf of Y is given. y 0 1 2 3 p(y) 0.50 0.35 0.15 0.05 (a) What is the probability that among 15 randomly chosen such individuals, at least 10 have no citations? (Round your answer to three decimal places.) (b) What is the probability that among...
Time left 1:3 45 Suppose you are considering a stock purchase for a 3-year investment horizon,...
Time left 1:3 45 Suppose you are considering a stock purchase for a 3-year investment horizon, with expected dividend payments of 20, and 25 per share in years 1, and 2, respectively. we assume your risk premium is 3% and the return of the safe asset is the 4%, what must your expected dividend be in year 3, if the expected future price of your stock is $24.95 at the end of year 3, and the most you would be...
Class Discussion Handout Q6. You are considering the purchase of a common stock that paid a...
Class Discussion Handout Q6. You are considering the purchase of a common stock that paid a dividend of S3.00 yesterday. You expect this stock to have a growth rate of 15 percent for the next 3 years. The long-run normal growth rate after year 3 is expected to be 5 percent (that is, a constant growth rate after year 3 of 5% per year forever). If you require a 14 percent rate of return, how much should you be willing...
(All answers were generated using 1,000 trials and native Excel functionality.) Suppose that the price of a share of a particular stock listed on the New York Stock Exchange is currently $39. The following probability distribution shows how the price per share is expected to change over a three- month period: Probability 0.05 0.10 0.25 0.20 0.20 Stock Price Change ($) 2 2 0 +1 +2 price per share is expected to change over a three- month period: Stock Price...
10. You are considering the purchase of a common stock that just paid a dividend of $2.00. You expect this stock to have a growth rate of 30 percent for the next 3 years, then to have a long-run normal growth rate of 10 percent thereafter. If you require a 15 percent rate of retum, how much should you be willing to pay for this stock? a. $97.50 b. $62.68 c. $82.46 d. $79.15 e. $71.27 11. You are given...
Problem 12-05 (Algorithmic) the New York Stock Exchange is currently $40. The following probability distribution shows how the price per share is expected to change over a three-month perlod: The price of a share of a particular stock listed Stock Price Change ($) Probability o.10 -3 .10 .20 0.15 0.15 1 0.20 0.10 f random numbers that can be used to generate the change in stock price over a three-month period. If required, round your answers to two decimal places....
4.23 Suppose that X and Y have the following joint probability function: 1 0.10 0.15 y| 3 | 0.20 0.30 5 0.10 0.15 (a) Find the expected value of g(x, Y) XY2 (b) Find μχ and μΥ.
Time left 1:3 45 Suppose you are considering a stock purchase for a 3-year investment horizon, with expected dividend payments of 20, and 25 per share in years 1, and 2, respectively. we assume your risk premium is 3% and the return of the safe asset is the 4%, what must your expected dividend be in year 3, if the expected future price of your stock is $24.95 at the end of year 3, and the most you would be...
Class Discussion Handout Q6. You are considering the purchase of a common stock that paid a dividend of S3.00 yesterday. You expect this stock to have a growth rate of 15 percent for the next 3 years. The long-run normal growth rate after year 3 is expected to be 5 percent (that is, a constant growth rate after year 3 of 5% per year forever). If you require a 14 percent rate of return, how much should you be willing...
Most questions answered within 3 hours.
-
Find the critical value(s) for the specified Wilcoxon
signed-rank test.
Sample size = 10, two-tailed test,...
asked 30 minutes ago -
why don't arctic animals feet freeze in winter biology
question
asked 13 minutes ago -
Cellular respiration in eukaryotes has the same purpose as
fermentation in prokaryotes
True
False
asked 15 minutes ago -
A random sample of size n = 32 is taken from a
population with mean μ...
asked 26 minutes ago -
Define the term myogenic index and describe how it is measured
experimentally. What cellular process can...
asked 18 minutes ago -
5.) (a) How does go-back-by N ARQ work?
(b) What operations are required for CRC error...
asked 28 minutes ago -
write a research report on the scope and potential of renewable
energy resources for the kingdom...
asked 27 minutes ago -
1) When the centers of two spherical masses are separated by
distance D, the masses exert...
asked 33 minutes ago -
Population Standard Deviation
5.0000
Sample Size
11
Sample Mean
54.9091
Confidence Interval
Confidence Coefficient
0.98
Lower...
asked 48 minutes ago -
Consider a t distribution with 15 degrees of freedom. Compute
P(-1.42<t<1.42). Round your answer to at...
asked 50 minutes ago -
2-chloro-2-methylpropane is classified as a ____.
primary alkyl chloride
secondary alkyl chloride
tertiary alkyl chloride
asked 48 minutes ago -
Help would be greatly appreciated
Mark each of the statements below as True (T) or False...
asked 50 minutes ago