An investor obtains the following probability distributions for two
stocks:
Statei
Pi
RX
RY
______ ____
_____ ____
1
30% -10%
40%
2
40% 10% -20%
3
30% 30 %
30
a. What are the expected returns for the Security X and for
Security Y?
b. What are the standard deviations of these two stocks?
c. What are the CVs for these two securities?
Expected return for stock X = 10%
Expected return for stock Y = 13%
Pi indicates Probability index
Standard deduction for stock X = 15.492
Standard deduction for stock Y = 27.221
Covariance of stock X and Stock Y = -60
An investor obtains the following probability distributions for two stocks: Statei Pi  
Stocks A and B have the following probability distributions: % Returns Probability A B 0.40 15 35 0.10 10 20 0.30 -5 15 0.20 -15 -5 If you form a 50-50 portfolio of the two stocks, calculate the expected rate of return and the standard deviation for the portfolio. (Remember, you must calculate a new range of outcomes for the portfolio.) Briefly explain why the standard deviation for the portfolio would be less than the weighted average of the standard deviations...
2- You have estimated the following probability distributions of expected future returns for Stocks X and Y: (2 marks) Stock X Probability Return 0.4 -20 0.5 0.1 2a- What is the expected rate of return for Stock X? 2b- What is the standard deviation of expected returns for Stock X?
Stocks X and Y have the following probability distributions of expected future returns: Probability 0.1 0.2 0.4 0.2 0.1 (10%) 2 12 20 48 (35%) 0 20 25 What are the expected returns of both X and Y? O 12% and 15% 13% and 14% 13% and 16% 13% and 15% 12% and 14%
s presented with the two following stocks 17. The investor Stock A Stock B Expected Return Standard Deviation 30% 40% 60% 50% the portfolio that the expected return Assume that the correlation coefficient between the stocks is zero. What stock A invests 30% i A.20% B.37% 07a 18. The investor is presented with the two following stocks: Stock A Stock B Expected Return Standard Deviation 0% 40% 50% 60% Assume that the correlation coefficient between the stocks is zero. What...
Consider the following expected return on two stocks for two particular market returns: With probability 1/2 the market return is equal to 4%, return of stock A is 1% and B is 6%. With probability 1/2 the market return is equal to 20%, return of stock A is 33% and B is 10%. (Hint: these are realizations and not expected values, you should calculate the expected returns using the given probabilities and returns) (a) What is the expected rate of...
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (5 %) (37 %) 0.1 3 0 0.6 14 21 0.1 20 29 0.1 31 45 Calculate the expected rate of return, , for Stock B ( = 13.30%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 20.55%.) Do not round intermediate calculations. Round your...
2. Consider the following expected return on two stocks for two particular market returns: With probability 1/2 the market return is equal to 4%, return of stock A is 1% and B is 6%. With probability 1/2 the market return is equal to 20%, return of stock A is 33% and B is 10%. (Hint: these are realizations and not expected values, you should calculate the expected returns using the given probabilities and returns) (a) What is the expected rate...
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...
Stocks X and Y have the following probability distributions of expected future returns: Probability X Y 0.1 -10.0% -35.0% 0.2 2.0% 0.0% 0.4 12.0% 20.0% 0.2 20.0% 25.0% 0.1 34.0% 45.0% Calculate the expected rate of return,� , for Stock X A. 12.20 B. 11.20 C. 12.00 D. 11.60
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...