a 0.07248 b 0.00386 c 0.26921 d 0.00939 e 0.05175 Calculate the Variance of the Rate of Return, Var(R)?ARecessionModerateGrowthStrongGrowthProb ofState of theEconomyB0.350.50.15End-of-Year BeginningSelling Price Price of theof the Stock StockC70001200016000D100001000010000Cash Return Percentagefrom your Rate ofinvestment ReturnE=C-DF=E/DE(R) =Weightedaverage ofrate ofreturnG=BxF?Differencebetween therealized rate ofreturn theexpected rate ofreturnH=G-E(R)Var (R) =Weightedaverage ofthe squareddifferenceH^2 x 8?

A B C D E F G probability Recession 0.35 7000 10000 -3000 -0.3 -0.105 Moderate 0.5…

Answered: Calculate the Variance of the Rate of…

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Calculate the Variance of the Rate of Return, Var(R)?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 2P: APT An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free...

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Question

0.07248

0.00386

0.26921

0.00939

0.05175

Calculate the Variance of the Rate of Return, Var(R)?
A
Recession
Moderate
Growth
Strong
Growth
Prob of
State of the
Economy
B
0.35
0.5
0.15
End-of-Year Beginning
Selling Price Price of the
of the Stock Stock
C
7000
12000
16000
D
10000
10000
10000
Cash Return Percentage
from your Rate of
investment Return
E=C-D
F=E/D
E(R) =
Weighted
average of
rate of
return
G=BxF
?
Difference
between the
realized rate of
return the
expected rate of
return
H=G-E(R)
Var (R) =
Weighted
average of
the squared
difference
H^2 x 8
?

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