A probability distribution of possible returns from a share has a variance of 0.0025. What is the standard deviation of this probability distribution? O a. 0.25 O b. 5% c. 0.05 d. Both (b) and (c)

Q: Suppose Stock A has an expected return of 18% and a variance of 0.17, while Stock B has an expected…

A: Expected return of a portfolio is calculated as the sum of their weighted returns. It can be…

Q: In a regression of the single-index model, the R-square is 68%, residual variance is 0.08, beta…

A: R square = 68% = 0.68 residual variance (σe^2)= 0.08 Beta (B) = 0.7 Let σm^2 = Market variance

Q: The Sharpe ratio is computed as the average: excess return divided by the variance of the returns )…

A: Sharpe ratio is the value that is obtained by dividing the equity risk premium by the standard…

Q: Exercises: a. The standard deviation of returns is 0.30 for Stock A and 0.20 for Stock B. The…

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Q: According to the mean-variance criterion, which one of the following investments dominates all…

A: As per the mean variance criterion the option to be selected is which will give high return with an…

Q: Calculate the range, the expected rate of return, the variance, and the standard deviation for the…

A: The range is the difference between the highest and the lowest value.

Q: Given the following historical returns, what is the variance? Year Return 1 7 percent 3 percent 3.…

A: Return in year 1 (R1) = 7% R2 = 3% R3 = 19% R4 = -11% R5 = -1% Let R = Average return

Q: In a regression of the single-index model, the R-square is 66%, residual variance is 0.02, beta…

A: The regression analysis is a statistical procedure that allows us to find the linear association…

Q: at is the variance of returns for Security ABC? probability distribution fro security ABC:…

A: Mean return would be expected probabilistic rate of return in both outcomes and variance would be…

Q: Find Portfolio Variance: Assume stock A, stock B, stock C are real estate stocks in a portfolio…

A: Weight of A (Wa) = 20% Wb = 35% Wc = 45% Standard deviation of A (Sa) = 3.2% Sb = 3.5% Sc = 4%…

Q: The historical rate of return on stock A was regressed on the rate of return of stock M (the…

A: Solution- Total variance of security =standard deviation of security^2…

Q: 1. 1. The average variance of financial assets on a market is 0.4% and the average covariance tween…

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Q: Returns             Year   X     y   1   17  %   20  % 2   20     32   3   11     15   4 – 7   – 18…

A: arithmetic average =sum of return/5 Arithmetic average =17+20+11-7+10/5=51/5=10.2 Arithmetic average…

Q: Your rate of return expectations for the stock of Gidimadjor Company during the next year are…

A: As per Q&A guidelines, We will answer first three subparts when multiple subparts given under…

Q: Over the past 3 years an investment returned 0.19, -0.11, and 0.07. What is the variance of returns?

A: Variance: Variance is the measure of dispersion of returns of an investment.

Q: e measure of volatility is Select one: a. sigma. b. standard deviation.  c. sigma squared. d.…

A: Volatility is change in stock price in up and down. That is very important in option pricing.

Q: Consider the following information: State Probability ABC, Inc. Return Boom…

A: Given:

Q: You are given the following information about 4 stocks: Variance-Covariance Matrix 3 0.0325 0.0125…

A: Weight in stock 1 (w1) = 0.25 Weight in stock 2 (w2) = 0.25 Weight in stock 3 (w3) = 0.25 Weight in…

Q: Which one of the following is defined as the average compound return earned per year over a…

A: In every business, amounts are being invested for the purpose of calculating and earnings returns.…

Q: The covariance of returns between MSFT and AAPL is 0.0044. The standard deviation of the return of…

A:

Q: Total risk is measured by and systematic risk is measured by Beta; standard deviation. Standard…

A: There are two types of risks systematic risk and unsystematic risk

Q: The covariance of Security X's returns and Security Y's returns is 10, and the variance of Security…

A: Correlation = Cov(x,y)/(SDx*SDy) SD is standard deviation i.e. square root of variance.

Q: Stock A has the following returns over the past periods. Calculate the downside risk measured by…

A: Downside risk is the risk of the market and it is a statistical measure which indicate the risk of…

Q: Given Portfolio 1 Expected Return= 0.15 Portfolio variance = 0.001 Standard Deviation = 0.0316…

A: A portfolio is the combination of various financial assets into one basket with the aim to earn…

Q: Calculate the coefficient of variation for a set of data with standard deviation of 4.2, number of…

A: The coefficient of variation is a ratio calculated by dividing the standard deviation by the mean.…

Q: Your rate of return expectations for the stock of Kayleigh Cosmetics Company during the next year…

A: Expected return shows possible return from the stock and standard deviation shows risk assign in…

Q: If two stocks have variance σ2=16 each, could their covariance be equal to σ12 = 20

A: It has been provided that the value of variance for two stocks is 16 . Thus, the standard deviation…

Q: EXERCISE 2 From the data below, find the following: [al expected return [b] Standard deviation [c]…

A: In the case of multiple sub-parts, as per the guidelines, only three subparts are allowed to be…

Q: The covariance of returns between Exxon Mobile Corporation (XOM) and Costco Wholesale Corporation…

A: Covariance and standard deviation are related through the coefficient of correlation between the two…

Q: the variance of stock A is .004, the variance of the market .007 and the covariance between the two…

A: Given that the variance of stock A is 0.004, and variance of the market is 0.007. First we need to…

Q: Suppose an investment is equally likely to have a 30% return or a -5% return. The variance on the…

A: 50% of probability of both returns Return 1 = 30%  Return 2 = -5%

Q: You have the following information: A C Market Alpha 1.85% 2% |-2.36% 0% Beta 1.36 0.95 1.98 1 Res.…

A: The performance of the portfolio can measure by using the 3 different methods as Sharpe ratio, the…

Q: The standard deviation of return on investment A is 19%, while the standard deviation of return on…

A: Correlation coefficient: it measures the degree to which two securities move in relation to each…

Q: Stock A has a variance of 0.25 and stock B has a variance of 0.16. The correlation coefficient…

A: A statistical measure that represents the spread among the return of the investment is term as the…

Q: A probability distribution of possible returns from a share has a variance of 0.0064.  What is the…

A: In the given question we are given variance of a probability distribution of possible returns from a…

Q: If two stocks have variance σ^2=16 each, could their covariance be equal to σ12 = 20

A: It has been provided that the value of variance for two stocks is 16 . Thus, the standard deviation…

Q: Calculate the risk (standard deviation) of a 2-asset portfolio, in which asset A has a variance of…

A:

Q: Consider the following information: State Probability ABC, Inc. Return Boom .25 0.15 Normal .50 0.08…

A: State of economy Probability Returns Boom 0.25 15% Normal 0.50 8% Slow down 0.15 4%…

Q: . Over the past 3 years an investment returned 0.18, -0.11, and 0.08. What is the variance of…

A: Return means additional benefit received over the invested amount for the period. Every investment…

Q: A risk manager estimates daily variance o, using a GARCH model on daily returns u;: o? = w + auf-, +…

A: The GARCH model is a financial model that is used to measure and analyze different types of…

Q: The following information are available: [3]     Stock A Stock B Expected Return 16% 12%…

A: Given  Stock A Expected Return - 16% Stock B Expected Return - 12% Stock A Standard Deviation - 5%…

Q: If beta of Stock A with market is 0.72 and and the market variance is 225 , the covariance between A…

A: Beta of stock A = 0.72 Market Variance = 225  Covariance between A and B = 202.5

Q: Returns   Year X Y   1   16  %   20  %   2   19     31     3   10     15     4 – 8   – 17     5   10…

A: A statistical measure that represents the variation in the return on the stock is term as the…