Q: what is the return of stock a what is the return of stockb what is the standard deviation on stock…
A: Given: tate Probability(P) Return A Return B Poor 40% -0.08 -0.15 Normal 35% 0.19 0.14 Good…
Q: An ideal value-relevant attribute is one for which the correlation coefficient of the values of the…
A: +1 correlation indicates positive correlation whereas -1 indicates negative correlation.
Q: Calculate the expected return for Stock media Prima and Stock Astro 2. Calculate the standard…
A: Probability (%) (1) Stock Media Prima(%) (2) Expected returns (3)=(1)×(2) Stock Astro (4)…
Q: A and 40% B. Compute the coefficient Estimate the market model equations for both stocks and
A: ERi=Rf+βi(ERm−Rf) where:ERi=expected return of investment Rf=risk-free rate βi=beta of the…
Q: Define the terms covariance and correlationcoefficient. How are they related to one another,and how…
A: Covariance refers to the situation which tells about the association between two variables how they…
Q: Calculate the covariance between the following assets [6] State of the world Probability…
A: Calculation of expected return Probability Stock A Stock B Return Expected return Return…
Q: The VIX measures Select one: a.Realized volatility B. Current volatility C. Historical volatility D.…
A: The VIX stands for volatility index. Volatility index was the first benchmark which was created by…
Q: a. Construct a price-weighted index for these three stocks, and compute the percentage change in the…
A: Price-Weighted Index = Sum of All Prices/Number of Stock Value-weighted Index = Total Value of…
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: The returns on share A follow the market model with coefficients aa = 0.01, ßa = 1.25. If at time t,…
A: Alpha term (a) = 0.01 Beta term (b) = 1.25 Market return (Rm) = 0.02 Actual return of A (Re) = 0.025…
Q: Total stock administration costs under the eoq model is the sum of
A: EOQ is the Economic order quantity model, which says that inventory should be ordered at such a…
Q: Define Rate of return on stock investment.
A: Capital Stocks: Common stock and preferred stock are the two types of capital stocks. Common…
Q: Probabilities and possible returns of share X have been projected as below based on different…
A: a) Calculation of expected return Probability Return Expected return X Y Z=X*Y 30% -13%…
Q: A stock’s returns have the following distribution: Calculate the stock’s expected return,…
A: Given:
Q: Which of the following shows the trade-off between expected profit (y-əxis) and in-stock probability…
A: The relationship between expected profit and probability is that for lower and higher expected…
Q: А. Compute the standard deviation of each stock. В. What is the covariance and correlation…
A: The mathematical measure of market uncertainty is the standard deviation. In stocks the standard…
Q: Using multi-period Binomial model derive the expression for the probability with which the price of…
A: The Black Scholes model and Binomial model are used for the option pricing under option pricing…
Q: The Price-Earning ratio (P/E) of stock A, B, C are 5, 3, 7 respectively. Which one you should buy?
A: A Price-earnings ratio is the relationship between firm's stock price and earnings per share. The…
Q: The return of stock B is __% The volatility of stock A is __% The volatility of stock B is __%
A: Thank you for posting questions. Since you have posted multiple questions, as per the guideline I am…
Q: What are the arithmetic and geometric returns for the stock?
A: Arithmetic and Geometric mean are used to calculate the expected mean of the stock Arithmetic Mean…
Q: Stock A Stock B Market Standard Deviation Return Correlation Coefficient between A & M Correlation…
A: The Capital Asset Pricing Model(CAPM) refers to the relationship between expected return for assets…
Q: You are given the following probability distribution for a stock: Probability Outcome…
A: A) The computation of expected return: Hence, the expected return is 6%.
Q: Market capitalization • Calculate earnings per share (EPS). • Calculate the appreciation of the YTD…
A: Since there are multiple sub parts are given , but as per guidelines we only allowed to do maximum…
Q: Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation,…
A: Here we have to find out expected return by using probability method.
Q: A reasonably good model for stock prices / asset values dS = µSdt+oSdz or ds S where is the expected…
A: GBM ( Geometric Brownian Motion) : It is a continuous-time stochastic process in which the logarithm…
Q: How do the price/earnings (P/E) ratio and the market/book (M/B) ratio provide a feel for the firm's…
A: The financial ratios refer to the ratios that are calculated using the financial data from the…
Q: The interpretation of stock beta coefficient requires an assumption of an average stock which has a…
A: Beta is a measure of a security's systematic risk which cannot be diversified and measures the…
Q: (a) Calculate the cost of common equity (stock). (b) Calculate the…
A: a) Last dividend paid (D0) = $0.80 Growth rate (g) = 7% Current price (P0) = $9.50 Floatation cost…
Q: a. A market value-weighted index Rate of return b. An equally weighted index %
A: Rate of return The profit an investor makes from an investment is called the rate of return. It…
Q: The beta risk of a share reflects the sensitivity of cash flow, earnings, and the share price to…
A: The beta of a stock or portfolio tells us how sensitive our holdings are to systematic risk.…
Q: Rocket's expected return is %. (Enter as a per Farmer's expected return is %. (Enter as a per Which…
A: The beta of a stock is the degree of responsiveness to movements in price with changes in the stock…
Q: C. According to your inputs, what is the company's P/E ratio? If the market P/E is 8, do your…
A: Return on Market = 8% Risk-free Rate = 1% Beta = 1.3 Earning Per share in next year = 10
Q: Which one of the following statements is correct concerning both the dollar return and the…
A: The dollar return is the net return on the investment in the dollar terms, where as the percentage…
Q: A stock's risk premium is equal to the: expected market risk premium times beta. expected market…
A: In the given question we are given four options regarding stock's risk premium and we need to select…
Q: (b) The following questions are based on the given information from table of probability…
A:
Q: When finding the covariance, should 2 stocks be used or can it be calculated using 1 stock and the…
A: Covariance is referred as the statistical toll, which helps in determining the relationship between…
Q: Firm A's stock returns are correlated with market returns at 0.90, while Firm B's stock returns are…
A: Solution:- Beta means the sensitivity of stock with respect to market.
Q: The slope of the Security Market Line equals to ____, and the slope of Capital Allocation Line…
A: The security market line is how we represent the capital asset pricing model on a graph that shows…
Q: Given the following information, determine which beta coefficient for stock A is consistent with…
A: Expected return (rs) = 10.1% Risk free rate (rRF) = 3.2% Market return (rM) = 11.2%
Q: Define required rate of return on Stock i
A: Stock refers to the security that represents the ownership of the stockholders in the company. The…
Q: Which of the following statement is TRUE? Preference shares have: A. variable dividends and stable…
A: Preference shares is share that have priority over the common stock.
Q: The "market RISK premium" a) Is the additional market return over the risk-free rate required to…
A: market risk premium: it is the difference between expected return of market and risk free rate.
Q: Calculated the expected return of each stock
A: Expected Return on Stock = Sum of (Probability x Return) in each case
Q: If the costing of the shares is based on the moving average method, the gain on the sale of the…
A: Under Moving Average Method, The Total Number of shares is divided by the Total cost of the shares…
a. Calculate the expected return for a share in S.
b. Calculate the standard deviation of a share in S.
Step by step
Solved in 2 steps with 4 images
- What does standard deviation measure? A. The holding period B. The gain on the investment C. Risk D. The amount of dividend #####################Probabilities and possible returns of share X have been projected as below based on different statutes of an economy. Required: a) Calculate the expected return if you buy this share. b) Calculate the variance and standard deviation.(a) A stock’s returns have the following distribution: Calculate the stock’s expected return, standard deviation, and the coefficient of variation.
- Based on the information, calculate expected returns for each share, variance for each share and standard deviation for each shareWhich of the following is needed to calculate a firm’s WACC? A. the cost of carrying inventory B. the amount of capital necessary to make the investment C. the cost of preferred stock D. the probability distribution of expected returns E. both b and c(b) the standard deviation of the returns of the stocks A and B
- (c) Consider information given in the table below and answers the question asked thereafter: i. Calculate expected return on each stock? On the basis of this measure, which stock you will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of this measure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of this measure, which stock you will choose?iv. Calculate covariance and coefficient of correlation between the returns of the stocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfolio comprising of $35,000 invested in stock A and remaining amount in stock B. Calculate risk and return of your portfolio. (d) Firm A reports a Profit Margin of 6.5% and a Total Asset Turnover Ratio of 3.25. Their total asset level is $8,500,000. Assume there are 700,000 shares outstanding and the PE ratio is 11. Also, assume the Return on Equity is 16%. Based on this, calculate…Beta is which of the following: A) standard deviation. B) total risk. C) Beta is the relationship which is between an investment's return, and the market return. D) unsystematic risk.Assume that the expected return and standard deviation of the company stock will be 17 percent, respectively. How appropriate is the sharpe ratio for these assets? When would you use the sharpe ratio?
- a) Share X and Share Y have the following returns with their respective probabilities. Share X Share Y Return Probability Return Probability 10% 0.3 15% 0.35% 0.31% 0.4-4% 0.4-10% 0.3 Calculate the following: i) The expected rate of returns for both shares. ii) The standard deviation for both shares. ii) On a stand-alone basis, select which stock is the riskier..Calculate the standard deviation of stocks B&Cwhat is the return of stock a what is the return of stockb what is the standard deviation on stock a?