(A) Expected loss is the mean value
(B) standard deviation calculation
(C) Coefficient of variation = [(standard deviation)/mean]*100
=(1838.620/1526)*100
= 120.49%
Loss Amount ($) Probability (%) 600 1,200 3,000 7,000 (a) What is Alfie's expected loss amount?...
8-6 EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: Probability B 0.1 0.2 A (10%) 2 12 20 38 (35%) 0 20 0.4 0.2 0.1 45 a. Calculate the expected rate of return, fe, for Stock B (f = 12%). b. Calculate the standard deviation of expected returns, o , for Stock A (o, = 20.35%). Now calculate the coefficient of variation for Stock B. Is it possible that most investors will regard...
Stocks A and B have the following probability distributions of expected future returns: Probability A B .1 (13%) (40%) .1 5 0 .5 15 21 .2 22 30 .1 33 48 a.) Calculate the expected rate of return for Stock B ( = 14.40%.) Do not round intermediate calculations. Round your answer to two decimal places. b.) Calculate the standard deviation of expected returns, σA, for Stock A (σB = 22.17%.) Do not round intermediate calculations. Round your answer to...
You are given the following probability distribution for a stock: Probability Outcome .5 -6% .5 18% A) Compute the expected return. B) Compute the standard deviation. C) Compute the coefficient of variation.
a.
What are the expected value and standard deviation for the rate
of return on assets?
b.
What is the expected rate of growth under risk?
c.
What are the standard deviation (risk) and coefficient of
variation of the expected rate of growth?
3. Nancy and Dave currently have $700,000 in assets and $260,000 in liabilities. Their average cost of debt is fixed at 7%. Their consumption and tax rates are 40% and 30%, respectively. Taxes are based on returns...
The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $7,000 and has an expected life of 3 years. Annual project cash flows begin 1 year after the initial investment and are subject to the following probability distributions: Project A Project B Probability Cash Flows Probability Cash Flows 0.2 $6,250 0.2 $0 0.6 $7,000 0.6 $7,000 02 $7,750 0.2 $19,000 BPC has decided to evaluate the riskier project at 13% and the less-risky project at 10%. a....
Asset A has an expected return of 15% and Asset B has an expected return of 12%. Based on a probability distribution, the standard deviation for Asset A is 10% and the standard deviation for Asset B is 5%. a.) Based only on the standard deviation, which investment is less risky? Discuss your reasons for your selection including why you feel that asset is less risky. b.) Calculate the coefficient of variation for each asset and post your answers. Based...
Stacey and Tracey have the same loss distribution: Loss = $0 with probability .6 Loss = $20 with probability .4 Find the expected loss and standard deviation for the distribution
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (13 %) (37 %) 0.1 6 0 0.5 10 18 0.2 22 28 0.1 38 35 A.Calculate the expected rate of return,rb , for Stock B (rA = 12.50%.) Do not round intermediate calculations. Round your answer to two decimal places. B. Calculate the standard deviation of expected returns, σA, for Stock A (σB = 19.26%.) Do not round intermediate calculations. Round your...
How do you solve for B?
10.1 Consider the following probability distribution of returns estimated for a proposed project that involves a new ultrasound machine: State of the Economy Very poor Poor Average Good Very good Probability of Occurrence 0.10 0.20 0.40 0.20 0.10 Rate of Return -10.0% 0.0 10.0 20.0 30.0 a. What is the expected rate of return on the project? b. What is the project's standard deviation of returns? What is the project's coefficient of variation (CV)...
Integrative-Expected return, standard deviation, and coefficient of variation An asset is currently being considered by Perth Industries. The probability distribution of expected returns for this asset is shown in the following table, EEB a. Calculate the expected value of return, r, for the asset. b. Calculate the standard deviation, σ, for the asset's returns c. Calculate the coefficient of variation, CV, for the asset's returns a. The expected value of return, r, for the asset is 13%. (Round to two...