A stock can earn a return of 10%, 20% or 0%, each with equal probability. What is the variance of this stock’s return?
A stock can earn a return of 10%, 20% or 0%, each with equal probability. What...
1. Snowflake Inc.’s stock can return either -10% or 20% annually with equal probability, and Peloton Inc’s stock can return either -15% or 25% annually with equal probability. The correlation between Snowflake and Peloton’s stock returns is 0. You have $100 to invest, and you decide to build a portfolio P which invests $50 in Snowflake and $50 in Peloton.a. What is Snowflake’s expected return?b. What is Snowflake’s standard deviation?c. What is portfolio P’s expected return?d. What is portfolio P’s...
What is the sample variance of the return of the following stock? Quarter Return 1st 10% 2nd -5% 3rd 0% 4th 20%
What is the expected return on a stock if the firm will earn 24% during a period of economic boom, 14% during normal economic periods, and 2% during a period of recession if the probabilities of these economic environments are 20%, 65%, and 15%, respectively? What is the required return using the capital asset pricing model if a stock's beta is 1.2 and the individual, who expects the market to rise by 11.2%, can earn 4.4% invested in a risk-free...
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%...
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.
Outcome Probability .10 .20 UAWN Stock W +2% +18% +9% -12% +8% Stock X +25% +10% +14% +3% -10% .10 a. What is the expected return for each stock? b. What is the standard deviation for each stock? c. What is the correlation between the stocks? d. If you hold a portfolio of the stocks that is weighted 60% W, and 40% X, what is the expected return and standard deviation for the portfolio? e. Assume that Stock X is...
A stock’s returns have the following distribution: Probability Stock Return 0.15 –11% 0.70 18% 0.15 51% Calculate the stock’s expected return. a. 21.90% b. 18.00% c. 20.00% d. 18.60% e. 19.33%
9. Consider the following two stocks: State Normal Boom Probability 80% 20% Return on Stock A 26% 22% Return on Stock B 12% 44% Stock A has a beta of 0.4, and Stock B's beta is 3.8. The risk-free rate is 3.2% and the return on the market portfolio is 12.4%. Which has the least systematic risk: Stock A or Stock B, or a portfolio formed with 15% of Stock A and 85% of Stock B? Please show all of...
5. Stock X has a 10% expected return, a Beta coefficient of .9, and a 35% standard deviation of expected return. Stock Y has a 12.5% expected return, a bet coefficient of 2, and a 25% standard deviation. The risk free rate is 2% and the market risk premium is 5% Calculate each stock’s coefficient of variation. Which stock is riskier? Calculate each stock’s required rate of return. Calculate the required rate of return of a portfolio that has $7,500...
Given the probability distribution below, calculate the expected rate of return for stock A and stock B Rate of return (%) Probability Stock A Stock B 0.1 10 35 0.2 2 0 0.4 12 20 0.2 20 25 0.1 38 45 Stock A = 14%; Stock B = 21% Stock A = 23% ; Stock B = 12% Stock A = 25%; Stock B = 15% Stock A =31% ; Stock B = 27%