14. SNOFI Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and he thinks that the firm's returns will have the probability distribution shown below. What's the expected return & standard deviation of the estimated returns? * Economic Probability Return Conditions Strong 0.55 0.45 Normal 0.35 0.2 Weak 0.1 -0.1 O A) 30.75%, 17.83% B) 0.1783; 0.3075 C) 3.07%; 3.18% O D) None of the above

14. SNOFI Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and he thinks that the firm's returns will have the probability distribution shown below. What's the expected return & standard deviation of the estimated returns? * Economic Probability Return Conditions Strong 0.55 0.45 Normal 0.35 0.2 Weak 0.1 -0.1 O A) 30.75%, 17.83% B) 0.1783; 0.3075 C) 3.07%; 3.18% O D) None of the above

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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14. John Lewis of Hungerford plc may have returns next year as follows: Return probability 10% 30% 20% 20% -10% 30% -20% 20% What is the standard deviation of returns for John Lewis? A. 24.65% B. 15.86% C. 14.83% D. 22.25%
Q2 Following are four economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast growth 0.30 60 % Slow growth 0.50 13 Recession 0.15 –15 Depression 0.05 -45 Compute the expected return and standard deviation. (Round your answers to 2 decimal places.) EXPECTED RETURN % STANDARD DEVIATION. %
53 Tucker Corporation's manager believes that the economic environment during the next year can be good, normal, or bad, and he thinks that a stock's returns will have the following probability distribution shown below. Good .50 15% Normal .20 0% Bad .30 -5% Calculate the expected rate of return Group of answer choices 3.33% 9.00% 6.00% 10.00%
Q25 Following are three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast growth 0.3 40 % Slow growth 0.4 10 Recession 0.3 –25 Determine the standard deviation of the expected return. (Do not round intermediate calculations and round your answer to 2 decimal places.) STANDARD DEVIATION. %
15 [Question text] Based on the following information, what is the expected return for the following stock? State of Economy Probability of State of Economy Rate of Return if State Occurs Boom 0.06 -6% Normal 0.74 7% Recession 0.20 18% Select one: A. 8.80 percent B. 8.23 percent C. 8.53 percent D. 8.42 percent
Consider the following information: State ofEconomy Probability of Stateof Economy Rate of Returnif State Occurs Recession .21 –.12 Normal .48 .14 Boom .31 .33 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
If D1 = $1.15, g (which is constant) = 5.24%, and P0 = $56.45, what is the stock's expected capital gains yield for the coming year? Please work out the problem, do not use excel.
Based on the following information, what is the standard deviation of returns? State of Economy Probability of Stateof Economy Rate of Return ifState Occurs Recession .28 − .096 Normal .41 .111 Boom .31 .221
Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) State of Economy Probability ofState of Economy Security Returnif State Occurs Recession 0.30 -6.5 % Normal 0.55 9.0 Boom 0.15 16.6
State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession .15 .04 −.17 Normal .55 .09 .12 Boom .30 .17 .27 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Month Zemin Corp. Market1 5% 3%2 2% 1%3 -1% 1%4 -2% -1%5 4% 4%6 3% 4% a. Given the following holding-period returns, compute the average returns and the standard deviations for the Zemin Corporation and for the market. b.If Zemin's beta is 0.83 and the risk-free rate is 9 percent, what would be an expected return for an investor owning Zemin? (Note: Because the preceding returns are based on monthly data, you will need to annualize the returns to make them comparable with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) c. How does Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk?
There is 11 percent probability of recession, 14 percent probability of a poor economy, 44 percent probability of a normal economy, and 31 percent probability of a boom. A stock has returns of −19.3 percent, 2.9 percent, 10.7 percent and 26.4 percent in these states of the economy, respectively. What is the stock's expected return? Multiple Choice 10.24% 13.30% 15.42% 5.18% 11.18%

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