ZuoTi.Pro
Question

State of Economy Probability of State of Economy Stock A Stock B TSX Boom .30 30%...

State of

Economy

Probability of

State of Economy

Stock

A

Stock

B

TSX

Boom

.30

30%

-9%

18%

Normal

.40

16%

12%

10%

Recession

.30

-10%

20%

-10%
  1. Calculate the covariance and correlation of the returns for stock B and the TSX.

  1. Calculate the beta of Stock A.

  1. Calculate the beta of stock B.

  1. Calculate the beta for the TSX.

  1. Using an excel spreadsheet and the calculations you have done above, prepare a spreadsheet that provides the expected returns and the risk for a portfolio that invests in stock A and stock B. Prepare the calculations using 4% increments in the weights.
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Formuals Used:-

Average=SUMPRODUCT($A$52:$A$54,B52:B54)

Coveriance B and TSX =SUMPRODUCT((C55-C52:C54),(D55-D52:D54),A52:A54)

Standard deviations=SUMPRODUCT($A$52:$A$54,(B55-B52:B54)^2)^(1/2)

Correlation B and TSX= B56 /(C57*D57)

covariance A and TSX =SUMPRODUCT((B55-B52:B54),(D55-D52:D54),A52:A54)

beta of A=B59/D57^2

beta of B=B56/D57^2

0 0
Add a comment
Know the answer?
Add Answer to:
State of Economy Probability of State of Economy Stock A Stock B TSX Boom .30 30%...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • State of Economy Probability of State of Economy Stock A Stock B TSX Boom .30 30%...

    State of Economy Probability of State of Economy Stock A Stock B TSX Boom .30 30% -9% 18% Normal .40 16% 12% 10% Recession .30 -10% 20% -10% Calculate the risk for stock B. Calculate the risk for the TSX. Calculate the covariance and correlation of the returns for stock A and stock B. Calculate the covariance and correlation of the returns for stock A and the TSX.

  • You have done your research for the following investments and your friend has provided their expectations...

    You have done your research for the following investments and your friend has provided their expectations for the markets for next year. Probability of State of State of Stock Stock Economy Economy A B TSX Boom .30 30% -9% 18% Normal .40 16% 12% 10% Recession .30 -10% 20% -10% * Remember to show all of your work * a. Calculate the expected return for stock A. (2 marks) b. Calculate the expected return for stock B. (2 marks) C....

  • e. Calculate the risk for stock B. (2 marks) f. Calculate the risk for the TSX....

    e. Calculate the risk for stock B. (2 marks) f. Calculate the risk for the TSX. (2 marks) g. Calculate the covariance and correlation of the returns for stock A and stock B. (2 marks) h. Calculate the covariance and correlation of the returns for stock A and the TSX. (2 marks) e. Calculate the risk for stock B. (2 marks) f. Calculate the risk for the TSX. (2 marks) g. Calculate the covariance and correlation of the returns for...

  • Home Work #3 Question 1 Classify the following events as mostly systematic or mostly un-systematic. Is...

    Home Work #3 Question 1 Classify the following events as mostly systematic or mostly un-systematic. Is the distinction clear in every case? a. Short term interest rates decrease expectantly. b. The interest rate a company pays on its short term debt borrowing is increased by the bank. c. Oil prices expectantly decline. d. An oil tanker runs aground creating a large oil spill. e. A major manufacturing company loses a multimillion dollar product liability suit. f. The Supreme Court of...

  • no excel work, show formula please You have done your research for the following investments and...

    no excel work, show formula please You have done your research for the following investments and your friend has provided their expectations for the markets for next year. Probability of State of State of Stock Stock Economy Economy A B TSX Boom .30 30% -9% 18% Normal .40 16% 12% 10% Recession .30 -10% 20% -10% Remember to show all of your work * h. Calculate the covariance and correlation of the returns for stock A and the TSX. (2...

  • no excel work. please provide formula. You have done your research for the following investments and...

    no excel work. please provide formula. You have done your research for the following investments and your friend has provided their expectations for the markets for next year. Probability of State of State of Stock Stock Economy Economy A B TSX Boom .30 30% -9% 18% Normal .40 16% 12% 10% Recession .30 -10% 20% -10% Remember to show all of your work * e. Calculate the risk for stock B. (2 marks) f. Calculate the risk for the TSX....

  • State of Economy Probability of State of Economy Rate of Return If State Occurs Stock K...

    State of Economy Probability of State of Economy Rate of Return If State Occurs Stock K Stock M Boom 0.10 25% 18% Growth 0.20 10% 20% Normal 0.50 15% 4% Recession 0.20 -12% 0% An individual plans to invest $5,000: $3,000 in Stock K and $2,000 in Stock M. What are the stock weights for this portfolio? (wK = 60%, wM = 40%) Using the weights computed in Part a, what is the expected return for the portfolio? (E(Rp) =...

  • Consider the following information: State of Economy Probability of State of Economy Rate of Return If...

    Consider the following information: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock A Stock B Stock C Boom 0.25 14% 15% 33% Bust 0.75 12% 3% -6% What is the expected return and standard deviation of returns on an equally weighted portfolio of these three stocks? 2. Consider the following information: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock K Stock M Boom 0.10 25% 18%...

  • Home assignment 4 Consider following information Probability of the state of economy Rate of return if state occurs StockA StockB boom normal a. b. c. 0.2 0.8 0.4 0.2 0.05 Calculate the expected...

    Home assignment 4 Consider following information Probability of the state of economy Rate of return if state occurs StockA StockB boom normal a. b. c. 0.2 0.8 0.4 0.2 0.05 Calculate the expected return of Calculate the variance and standard deviation of each stock. Calculate the covariance between stock A and B returns and the correlation coefficient. Calculate the expected return of the portfolio (Portfolio!) consisting 40% of stock A and 60% of stock B. Calculate the variance and standard...

  • The risk free rate of return is 1.8% and the expected return on the market portfolio...

    The risk free rate of return is 1.8% and the expected return on the market portfolio is 8.35%. Given the following possible returns for Lidar Limited and the S&P/TSX Composite Index(found in Table 1.1): a.Calculate the expected return for Lidar (illustrate your solution using MS Equation Editor). b.Calculate the expected return, variance and standard deviation for the S&P/TSX Composite Index(illustrate your solution using an embedded Excel Spreadsheet). c.Using an embedded Excel Spreadsheet, calculate the Covariance and Correlation Coefficient between Lidar’s...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT