(Related to Checkpoint 7.1) (Expected rate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 4.5 percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? Probability Return 0.10 negative 4 % 0.45 3 % 0.35 5 % 0.10 10 % a. The investment's expected return is nothing%. (Round to two decimal places.)
1.
Expected returns=0.1*(-4%)+0.45*3%+0.35*5%+0.10*10%=3.700%
2.
Standard
Deviation=sqrt(0.1*(-4%-3.7%)^2+0.45*(3%-3.7%)^2+0.35*(5%-3.7%)^2+0.10*(10%-3.7%)^2)=3.273%
No should not invest..as Treausry bills have zero standard deviation or risk but offer higher return
(Related to Checkpoint 7.1) (Expected rate of return and risk) B. J. Gautney Enterprises is...
(Expectedrate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 4.6%. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? Probability Return 0.20 -5% 0.40 4% 0.20 6% 0.20 10%
MBA 579 (Summer 2018) Homework: Chapter 7 Homework Save Score: 0 of 4 pts 4 of 8 (2 complete) HW Score: 23.08%, 6 P7-6 (similar to) Question Help * (Related to Checkpoint 7.1) (Expected rate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 4.0 percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? Probability 0.20 0.40 0.20 0.20 Return -4% 3% 5% 9%...
(Expected rate of return and risk) Carter Inc. is evaluating a security. Calculate the investment’s expected return and its standard deviation. Probability/ return. 0.15/6%, 0.35/9%, 0.35/10%, 0.15/14% What is the investment’s expected rate of return?(round to two decimal places)
Please assist with a-c. thank you Related to Checkpoint 8.1) (Computing the portfolio expected rate of return) Penny Francis inherited a $200,000 portfolio of investments from her grandparents when she turned 21 years of age. The portfolio is comprised of Treasury bills and stock in Ford (F) and Harley Davidson (HOG) a. Based on the current portfolio composition and the expected rates of return, what is the expected rate of return or Penny's portfolio? b. If Penny wants to increase...
(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return 0.25 13% 0.10 negative 7% 0.50 17% 0.40 8% 0.25 20% 0.40 13% 0.10 20%
(Expected rate of return and risk) Summerville Inc. is considering an investment in one of two common stocks. Given the informa standard deviation) and return of each? a. The expected rate of return for Stock A is 15%. (Round to two decimal places) The expected rate of return for Stock Bis 9.9%. (Round to two decimal places) b. The standard deviation for Stock Ais % (Round to two decimal places) ing an investment in one of two common stocks. Given...
An investor’s utility function for expected return and risk is U = E(r) − 4σ2. Which of the following would this investor prefer to invest in: A risk-free security offering a return of 8 percent per year A risky portfolio with expected return of 14 percent per year and standard deviation of 25 percent per year Select one: a. Risk-free security b. Risky portfolio
(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return 10% 0.35 0.25 -4% 14% 7% 0.30 0.25 16% 0.35 20% 0.25 23% 0.25 %. (Round to two decimal places.) a. Given the information in the table, the expected rate of...
(Related to Checkpoint 8.1) (Expected rate of return) James Fromholtz is considering whether to invest in a newly formed investment fund. The fund's investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the fund's performance will hinge on how the national economy performs in the coming year. Specifically, he suggested the following possible outcomes: a. Based on these potential outcomes, what is your estimate of...
a. The expected rate of return for portfolio A is: The standard deviation of portfolio A is: b. The expected rate of return for portfolio B is: The standard deviation for portfolio B is: (Computing the expected rate of return and risk) After a tumultuous period in the stock market, Logan Morgan is considering an investment in one of two portfolios. Given the information that follows, which investment is better, based on risk (as measured by the standard deviation) and...