Assume that we wish to determine the expected value and standard deviation of returns of Assets A. The expected returns of assets A and probabilty for each of the next 5 years are given in columns 1 and 2 respectively in the table. Find the expected value and standard deviation of returns for Asset A Year            Asset A             Prob. 2019           18,00               0,25 2020           16,00               0,20 2021           13,00               0,15 2022           9,00                 0,20 2023           11,00               0,20

Question

Assume that we wish to determine the expected value and standard deviation of returns of Assets A. The expected returns of assets A and probabilty for each of the next 5 years are given in columns 1 and 2 respectively in the table. Find the expected value and standard deviation of returns for Asset A

Year            Asset A             Prob.

2019           18,00               0,25

2020           16,00               0,20

2021           13,00               0,15

2022           9,00                 0,20

2023           11,00               0,20

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.
Tagged in
BusinessFinance

Risk & Return

Related Finance Q&A

Find answers to questions asked by students like you.

Q: What is municipal bond?

A: Answer: A municipal bond is nothing but bond issued by a territorial or local government, or one of ...

Q: A developer plans to start construction of a building in one year if at that point rent levels make ...

A: Click to see the answer

Q: With the aid of appropriate diagram, explain the three main categories of attitude towards risk and ...

A: The three main types of risks are a) risk averse b) risk neutral c) risk seeking   All the three t...

Q: Explain the difference between debt to income (DTI) ratio and loan to value ratio (LTV). In addition...

A: Answer: The debt-to-income (DTI) is a measure of personal finance, comparing the monthly debt paymen...

Q: Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago...

A: Excel Spreadsheet:

Q: What is the statement of cash flows, and what are some questions it answers?

A: A cash flow statement is the summary of cash flow which provides the details of the cash and cash eq...

Q: b. Distinguish between time limit orders and Limit orders

A: Time limit orders are the orders when the investors place an order to sell or buy the stock at a par...

Q: A Treasury bond that matures in 10 years has a yield of 5.75%.A 10-year corporate bond has a yield o...

A: The formula to compute default risk premium:

Q: Suppose that the exchange rate is 0.60 dollars per Swiss franc. If the franc appreciates 10% against...

A: Exchange rate is the value of one country’s currency in exchange of other country’s currency. If cur...

Q: Discuss the view that interest rate risk management has been the most crucial in the risk management...

A: Interest rate risk is the risk of the variations in the current worth and timing of all the anticipa...

Q: In 1983, the Japanese yen–U.S. dollar exchange rate (USD/JPY) was 245 yen per dollar,and the dollar ...

A: Formulas:

Q: How should (a) signaling and (b) the clienteleeffect be taken into account by a firm as it considers...

A: “Since you have asked multiple questions, we will solve the first question for you. If you  want any...

Q: Good managers not only identify and evaluate realoptions in projects—they also structure projects so...

A: Capital budgeting decisions are the most important decisions for the company as it affects the profi...

Q: Michelle Walker is interested in buying the stock of Sandhill, Inc., which is increasing its dividen...

A: Growth rate =7.70% Dividend =$2.65 Required return = 13.00%

Q: Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equip...

A: a) NPV of the project is the sum of the initial investment and the present value of all cash inflows...

Q: (a) Enumerate four (4) factors to consider in analyzing the domestic economy as part of fundamental ...

A: Hi there! Thank you for the question. Multiple questions are posted. As per company guidelines exper...

Q: Which one of the following is a correct ranking of securities based on their volatility over a very ...

A: Volatility refers to vulnerability of the security market prices to fluctuate. In case, a security h...

Q: Define development bond

A: A development bond is a sort of monetary security that is utilized by pulling in private speculators...

Q: Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain ...

A: Calculation of Cost of Owning, Cost of Leasing and NAL of Lease: Excel Spreadsheet: Excel Workings:

Q: Expound on the arguments in favour and against financial innovation. Provideexamples of financial in...

A: The question is based on the argument about financial innovation and its role in  financial system.

Q: Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago...

A: Calculation of the initial outflow is shown below: Hence, the initial outflow is $110,500.

Q: Wilson Partners manufactures thermocouples for remote temperature monitoring of electronics applicat...

A: Excel Spreadsheet: Excel Workings:

Q: A You are considering investing in a security that will pay you $1000 in 30 years. If the appropria...

A: Excel Spreadsheet:

Q: What effect do minor deviations from the EOQ have on totalinventory cost?

A: Minor variations from the EOQ will not in general highly affect the total inventory cost except if t...

Q: What is Long-Term Equity AnticiPation Security (LEAPS)?

A: Long-term equity anticipation securities (LEAPS) It's a contract for trading on open market options...

Q: Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of re...

A: a) Market Value is calculated as the number of units outstanding multiplied by the price. Total Ma...

Q: Sidewinder, Inc., has sales of $634,000, costs of $328,000, depreciation expense of $73,000, interes...

A: SALES 634000 COSTS 328000 DEPRECIATION 73000 INTEREST  38000 TAX RATE 21%    

Q: Fiona Sporty uses a purchases journal, a cash payments journal, a sales journal, a cash receipts jou...

A: The purchase journal records all the merchandise purchase on credit. In a single column purchase jou...

Q: What is indifference curve?

A: Indifference curve: It is a diagram indicating a mix of two items that give equivalent fulfillment a...

Q: Suggest what is the best financial instrument to offset market risk exposure and from market volatil...

A: The question is based on the concept of hedging the market risk and volatility by use of a proper fi...

Q: What is the logic behind allowing tax loss carrybacks/carryforwards?

A: Logic behind allowing tax loss carrybacks and carryforwards: A tax loss carryback permits a company ...

Q: What is a financial security?

A: Investors use financial security to be secured financially as they can get some income on periodic b...

Q: Why might the riskiness of cash flow from the residual value of the real estate differ from the risk...

A: It is nothing but the salvage value or scrap value of an asset. It speaks to the measure of signific...

Q: Mel's Furniture received an invoice dated September 27 for 5 bedroom sets at $3,000 each. The invoic...

A: The net payment made by the buyer to the seller is the invoice amount after reducing all the returns...

Q: SRJ Corporation is considering an expansion project. The necessary equipment could be purchased for ...

A: Click to see the answer

Q: Investors of RIL have a chance to buy RIL shares at Rs 1,257 as compared to its presentmarket price ...

A: Present value of an amount can be computed by discounting that amount. Discounting factor can be cal...

Q: Next Pharmacy Ltd, an all equity finance company has started the production of a vaccine against COV...

A: CAPM: Capital asset pricing model: Required rate of return = Risk free rate + (Beta*(Market rate -Ri...

Q: Options have a unique set of terminology. Define the following terms: (4) Expiration date

A: Expiry date in derivatives is the last day of the legitimacy of derivative agreements, for example, ...

Q: Using the following data: Scenario Probability return K1 return K2 0.2 -10% 5% W2 0.4 0% 30% W3 0.4 ...

A: Excel Spreadsheet: Excel Workings:  

Q: Define classified stock

A: Answer: Classified stock is nothing but partition of stock into more than one class of common stock,...

Q: Question 1 a). Anna is considering investing in a bond currently selling in the market for ȼ875. The...

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and s...

Q: Skye’s earnings per share last year were $3.20, the common stock sells for $55.00, last year’s divid...

A: Hi, since there are multiple subpart questions posted, we will answer the first three subpart questi...

Q: Edelman Engines has $17 billion in total assets —ofwhich cash and equivalents total $100 million. It...

A: Calculation of market to book ratio and EV to EBITDA ratio: Answer: Market to book ratio is 1.18 EV ...

Q: What is free cash flow? What are its five uses? Why is FCFimportant?

A: The cash generated over and above required by business operations and capital expenditure is called ...

Q: How has the development of credit and debit cards affected firms’ currency holdings?

A: The development of Debit and Credit cards has negatively impacted currency holdings.

Q: Which is easier to calculate directly, the expected rate of return on the assets of a firm or the ex...

A: The return on assets states how profitable the assets of company are in generating the revenue. To c...

Q: What are some factors that complicate the post-audit process?

A: Capital projects are selected by using capital budgeting techniques. Post audit refers to evaluation...

Q: 1. what is the amount of the unrealised profit to be eliminated if the parente year end inventory in...

A: Click to see the answer

Q: Suppose Firm A plans to retain $100 million of earnings for the year. It wants tofinance its capital...

A: Computation:

Q: Firm C currently has 320,000 shares outstanding with current market value of $33 per share and gener...

A: Market value of equity can be calculated from EBIT by subtracting the interest rate of both the debt...