calculate the standard deviation of returns.

Q: Define standard deviation

A: It refers to the variation in the actual observations from the average. Z-Score helps to know how…

Q: What is an acceptable current ratio?

A: Definition: Ratio analysis: It is the financial analysis tool for measuring the profitability,…

Q: How do the Internal-Rate-of-Return Criterion relate to the PW Analysis?

A: Capital budgeting:   It is the process in which the business uses to determine which proposed fixed…

Q: Describe how the FIFO method is different from the weighted-average method.

A: FIFO and weighted average method are the accounting tool for the inventory valuation. Under FIFO,…

Q: Order the expected values from smallest to largest.

A: Expected Value: It is estimated by adding all the outcomes which are weighted by their…

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: What is the standard deviation of asset​ M?

A: Standard deviation tells us how much the expected vary from the actual result.

Q: Calculate: - Standard Deviation - Beta  - Covariance

A: Risk means possibility that results of uncertain events will be different from the expected results.…

Q: What is the difference between a historical beta,an adjusted beta, and a fundamental beta?

A: Introduction: Beta is nothing but a metric used to assess a portfolio’s uncertainty or risk, with a…

Q: Assume that every asset has the same expected return and variance. Furthermore, all assets have the…

A: Variance is a statistical tool used to measure the extent to which the returns are spread from the…

Q: Define the following terms: Factor risk premium Unit root Random walk with drift…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: The variance and its square root, the standard deviation, are the most commonly used measures of…

A: Variance refers to the expectation of squared deviation of a random value from its arithmetic mean.…

Q: What is the difference between between beta and standard deviatio

A: In the world of finance in general and investing in particular we often use the concepts of beta as…

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: 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: Define average return

A: The formula to compute average return as follows:

Q: What type of risk is measured by the standard deviation?

A: Standard deviation is the measure of risk that the actual return of an investment will deviate from…

Q: Define the term variance analysis.

A: Variance:   Variance refers to the difference level in the actual cost incurred and standard cost.…

Q: What would be the expected value, variance and standard deviation of an event that always took the…

A: Expected value :- Expected value is anticipated future value of an event.  Standard Deviation:-…

Q: Define variance

A: Variance in statistics is the calculation of the distribution in an information source between the…

Q: Show that the lower semi-standard deviation corrected expectation has properties (UT) und (UC)

A: Semi-deviation is an alternative to standard deviation for determining the degree of risk associated…

Q: Write down two possible causes for each variance.

A: Variance refers to the differs between the budgeted and actual. It may be favourable and…

Q: Calculate the dollar-denominated returns for each scenario. should be indicated by a minus sign.)

A: Exchange rate(ER) is that rate at which national currency can be valued in terms of foreign…

Q: Define real rate of return.

A: Real Rate of Return is defined as the rate that has been adjusted for rise in prices of commodities.…

Q: The regression line in a scatterplot is also known as a(n): O A. R-squared line. O B. high-low line.…

A: A regression line seems to be a line that is used to define how a set of data behaves. In other…

Q: What is the expected spot rate?

A: A spot rate is a price quoted for immediate settlement on an interest rate, commodity, security, or…

Q: Standard deviation measures which type of risk?

A: Standard deviation is an important measure of risk in finance.

Q: Explain Measures of Variance and Risk?

A: Variance tests normal or normal variability. Variability is volatility for investors, and volatility…

Q: What was the correlation between both return series?

A: Answer: Introduction: A linear correlation measure between two variables that is, An independent of…

Q: Compute for the Standard Deviation:

A: Standard deviation is the variation in returns from the mean value. Standard deviation SD =…

Q: Define weighted average.

A: Inventory cost flow assumptions: These are the methods used by the companies to compute the cost…

Q: Is there a difference between arithmetic and geometric average returns? Is it true that they…

A: Geometric average is generally used by investment professionals to measure the performance of…

Q: Show how to estimate beta using regression analysis

A: Beta can be decided either with linear regression or simple regression. The regression lines slope…

Q: Define residual distribution model

A: The Residual Dividend Model or residual distribution model is a method deployed by company in which…

Q: Please calculate the variance

A: Expected Return or mean is the average return of the data given. Risk is the volatility around the…

Q: Describe the two basic differences between the weighted average and the FIFO method.

A: Inventory: Inventory refers to the stock of goods purchased, utilized and maintained by the company…

Q: Define variance analysis.

A:

Q: What is the Variance of returns for Security XYZ?

A: Outcome Probability Return A 20% 20% B 80% 25%   Expected return = (Probability of…

Q: d the (a) variance and (b) standard deviation

A:

Q: Calculate Paulson's WACC using market-value weights.

A: WACC is the weighted average of the cost of capital employed in a company. A company capital is…

Q: Compute for the returns, average of returns and Standard Deviation:

A: Returns Xi is the holding period return for stock prices. Xi= P1/P0 -1 Mean Xbar = ∑Xi/n Standard…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.