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Consider the following returns for two investments, A and B, over the past four years: 9 10 78 98-16% 14% 158 Investment 1: Investment 2s a. Calculate the mean for each investment. (Round your answers to 2 decimal places.) Inve b. Calculate the standard deviation for each investment. (Round your answers to 2 decimal places.) Standard Deviation 2
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Problem 8-05 Two investments generated the following annual returns: Investment x 13% Investment Y 24% 22 19 20x0 20X1 20x2 20x3 20X4 16 a. What is the average annual return on each investment? Round your answers to one decimal place. The average annual rate of return on X: The average annual rate of return on Y: b. What is the standard deviation of the return on investments X and Y? Round your answers to two decimal places. Standard deviation of...
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8.2
The coefficient of variation is a better measure of stand-alone risk than standard deviation because it is a standardized measure of risk per unit; it is calculated as the -Select- divided by the expected return. The coefficient of variation shows the risk per unit of return, so it provides a more meaningful risk measure when the expected returns on two alternatives are not -Select- .. The Sharpe ratio compares the asset's realized excess return to its -Select- over a...
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Problem 8-05 Two investments generated the following annual returns: Investment X Investment Y 20x0 13% 17 % 20X1 24 20X2 18 20x3 14 20X4 12 a. What is the average annual return on each investment? Round your answers to one decimal place. The average annual rate of return on X: % The average annual rate of return on Y: b. What is the standard deviation of the return on investments X and Y? Round your answers to two decimal places....
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Consider two $60,000 investments – call them Investment A and
Investment B. Both investments will earn $5,000 with a probability
of 0.5 and $1,000 with a probability of 0.5. Investment A will use
100% equity financing (issuing stocks). Investment B will get
$30,000 through issuing stocks and $30,000 through issuing bonds.
Investment B must pay 4% interest on the bonds.
a. Calculate the expected returns on equity (returns after
interest payments divided by the amount of equity) for Investment A...
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4% C9 The monthly returns of two investment funds, Fund A and Fund B are given in the table. Expected return in this case is the historic return Risk free rate is 2% per annum 1 1 Calculate the Sharpe ratios of the two funds 2 Based on only the Sharpe ratio, which fund has performed better Monthly return Fund A Fund B an-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 4% 2% 5% 9% 5%...
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Consider the following information for two investments, A and
B:
Mean Standard Deviation
Investment A 8 6
Investment B 9 8
Which investment provides the highest risk?
1. Investment A
2. Investment B
3. There isn't enough information to answer this question.
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An analyst gathered the following information about a
portfolio's performance over the past ten years:
Mean annual return: 11.8%
Standard deviation of annual returns: 15.7%
Portfolio Beta:1.2
If the mean return on the risk-free asset over the same period
was 5.0%, the Sharpe ratio for the portfolio is closest to:
Sharpe ratio
A
0.23
B
0.36
C
0.43
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Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment B 2015 5% -5% -2% 2014 -20% 15% 2013 30% 20% 2012 40% 2011 5% 10% a) Calculate the average return and the risk premium for each investment. Which investment is likely to be is riskier? Explain. (6 marks) b) Calculate the standard deviation for each...
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1. We observe the following annual returns on a stock in the past three years. The annual risk- free rate is 5%. Year 2016 2016 | Realized Return | 10% - 2017 300% 2018 -10% 2018 | (a) What is the arithmetic average stock return? (4%) (b) What is the geometric average stock return? (4%) (c) What are the sample mean and standard deviation of the stock return? (8%) (d) What is the stock's Sharpe ratio? (4%) (e) Jessica invests...
Consider the following returns for two investments, A and B, over the past four years: 9 10 78 98-16% 14% 158 Investment 1: Investment 2s a. Calculate the mean for each investment. (Round your answers to 2 decimal places.) Inve b. Calculate the standard deviation for each investment. (Round your answers to 2 decimal places.) Standard Deviation 2
Problem 8-05 Two investments generated the following annual returns: Investment x 13% Investment Y 24% 22 19 20x0 20X1 20x2 20x3 20X4 16 a. What is the average annual return on each investment? Round your answers to one decimal place. The average annual rate of return on X: The average annual rate of return on Y: b. What is the standard deviation of the return on investments X and Y? Round your answers to two decimal places. Standard deviation of...
8.2
The coefficient of variation is a better measure of stand-alone risk than standard deviation because it is a standardized measure of risk per unit; it is calculated as the -Select- divided by the expected return. The coefficient of variation shows the risk per unit of return, so it provides a more meaningful risk measure when the expected returns on two alternatives are not -Select- .. The Sharpe ratio compares the asset's realized excess return to its -Select- over a...
Problem 8-05 Two investments generated the following annual returns: Investment X Investment Y 20x0 13% 17 % 20X1 24 20X2 18 20x3 14 20X4 12 a. What is the average annual return on each investment? Round your answers to one decimal place. The average annual rate of return on X: % The average annual rate of return on Y: b. What is the standard deviation of the return on investments X and Y? Round your answers to two decimal places....
4% C9 The monthly returns of two investment funds, Fund A and Fund B are given in the table. Expected return in this case is the historic return Risk free rate is 2% per annum 1 1 Calculate the Sharpe ratios of the two funds 2 Based on only the Sharpe ratio, which fund has performed better Monthly return Fund A Fund B an-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 4% 2% 5% 9% 5%...
Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment B 2015 5% -5% -2% 2014 -20% 15% 2013 30% 20% 2012 40% 2011 5% 10% a) Calculate the average return and the risk premium for each investment. Which investment is likely to be is riskier? Explain. (6 marks) b) Calculate the standard deviation for each...
1. We observe the following annual returns on a stock in the past three years. The annual risk- free rate is 5%. Year 2016 2016 | Realized Return | 10% - 2017 300% 2018 -10% 2018 | (a) What is the arithmetic average stock return? (4%) (b) What is the geometric average stock return? (4%) (c) What are the sample mean and standard deviation of the stock return? (8%) (d) What is the stock's Sharpe ratio? (4%) (e) Jessica invests...