Question

EXPECTED RETURN A stock's returns have the following distribution: Demand for the Probability of this Rate of Return If Company's Products Demand Occurring This Demand Occurs Weak (44%) Below average (11) Average Above average Strong a. Calculate the stock's expected return. Round your answer to two decimal places. % b. Calculate the stock's standard deviation. Do not round intermediate calculations. Round your answer to two decimal places. c. Calculate the stock's coefficient of variation. Round your answer to two decimal places.

Answer 1

(PxR - (Sum of Px Probability(P) Return(R) PUR R)] =D DxD Px(DxD) 0.2 -44 -8.8 -20.5 420.25 84.05 0.1 -11 -1.1 -1.1 1.21 0.121 0.3 12 3.6 12.96 3.888 0.2 39 7.8 7.8 60.84) 12.168 0.2 51 10.21 10.2 104.04 20.808 Sum = Mean= 11.7| Sum=Variance 121.035 3.60

(a) Expected Return = Mean = 11.7%

(b) Standard Deviation = Square Root of Variance = (121.035)^1/2 = 11%

(c) Co effecient of Variation = (Standard Deviation/Mean)×100 = (11/11.7)×100 = 94.02%