Consider the following annual returns of Molson Coors and International Paper: Molson International Coors Раper 6.4% Year 1 25.8% Year 2 -10.3 -19.4 Year 3 46.0 -0.4 Year 4 -10.7 28.5 Year 5 18.1 -13.0 Compute each stock's average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) International Molson Coors Average return Standard deviation % % Раper % % Coefficient of variation Which stock appears better? O International Paper O Molson Coors

Consider the following annual returns of Molson Coors and International Paper: Molson International Coors Раper 6.4% Year 1 25.8% Year 2 -10.3 -19.4 Year 3 46.0 -0.4 Year 4 -10.7 28.5 Year 5 18.1 -13.0 Compute each stock's average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) International Molson Coors Average return Standard deviation % % Раper % % Coefficient of variation Which stock appears better? O International Paper O Molson Coors

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 19P

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An analyst gathered daily stock returns for Feburary 1 through March 31, calculated the Fama-French factors for each day in the sample (SMBt and HMLt), and estimated the Fama-French regression model shown in Equation 6-21. The estimated coefficients were ai = 0, bi = 1.2, ci = 0.4, and di = 1.3. On April 1, the market return was 10%, the return on the SMB portfolio (rSMB) was 3.2%, and the return on the HML portfolio (rHML) was 4.8%. Using the estimated model, what was the stocks predicted return for April 1?
The Dow Jones Industrial Average (DJIA) and the Standard Poors 500 (SP 500) indexes are used as measures of overall movement in the stock market The DJIA is based on the price movements of 30 large companies: the SP 500 is an index composed of 500 stocks. Some say the SP 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the SP 500 for 15 weeks, beginning with January 6, 2012, follow (Barrons web site, April 17, 2012). a. Develop a scatter chart for these data with DJIA as the independent variable. What does the scatter chart indicate about the relationship between DJIA and SP 500? b. Develop an estimated regression equation showing how SP 500 is related to DJIA. What is the estimated regression model? c. What is the 95% confidence interval for the regression parameter 1? Based on this interval, what conclusion can you make about the hypotheses that the regression parameter 1 is equal to zero? d. What is the 95% confidence interval for the regression parameter 0? Based on this interval, what conclusion can you make about the hypotheses that the regression parameter 0 is equal to zero? e. How much of the variation in the sample values of SP 500 does the model estimated in part (b) explain? f. Suppose that the closing price for the DJIA is 13,500. Estimate the closing price for the SP 500. g. Should we be concerned that the DJIA value of 13,500 used to predict the SP 500 value in part (f) is beyond the range of the DJIA used to develop the estimated regression equation?
Consider the following annual returns of Molson Coors and International Paper: MolsonCoors International Paper Year 1 20.3% 5.3% Year 2 -9.2 −18.3 Year 3 40.5 −0.1 Year 4 -8.5 27.4 Year 5 17.0 −11.9 Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) Molson Coors International Paper Average return _________.__% _______.__% Standard deviation __________.__% _______.__% Coefficient of variation __________.__ __________.__
Consider the following annual returns of Estee Lauder and Lowe’s Companies: EsteeLauder Lowe’s Companies Year 1 23.4 % −6.0 % Year 2 −26.0 16.1 Year 3 17.6 4.2 Year 4 49.9 48.0 Year 5 −16.8 −19.0 Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) ESTEE LAUDER. LOWES COMPANY Average return. %. % Standard deviation % % Coefficient of variation
Consider the following annual returns of Molson Coors and International Paper: Molson Coors International Paper Year 1 23.8 % 6.0 % Year 2 − 9.9 −19.0 Year 3 44.0 −0.8 Year 4 − 9.9 28.1 Year 5 17.7 −12.6 Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.)
Consider the following annual returns of Molson Coors and International Paper: Molson Coors International Paper Year 1 19.3 % 5.1 % Year 2 − 9.0 −18.1 Year 3 39.5 −0.8 Year 4 − 8.1 27.2 Year 5 16.8 −11.7 Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) Molson Coors International Paper Average return % % Standard deviation % % Coefficient of variation
Consider the following annual returns of Molson Coors and International Paper: MolsonCoors International Paper Year 1 21.8 % 5.6 % Year 2 − 9.5 −18.6 Year 3 42.0 −0.4 Year 4 − 9.1 27.7 Year 5 17.3 −12.2 Compute each stock’s average return, standard deviation, and coefficient of variation.
Consider the following annual returns of Molson Coors and International Paper: MolsonCoors International Paper Year 1 16.8 % 4.6 % Year 2 − 8.5 −17.6 Year 3 37.0 −0.3 Year 4 − 7.1 26.7 Year 5 16.3 −11.2 Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) Avergae Return Standard deviation Coefficient of variationWhich stock appears better?multiple choice International Paper Molson Coors
GM stock produced the following monthly returns (Jan.- May): 5%, 8%. -2%, 12%and 15% Ford stock produced the following monthly returns ( Jan.- May): 1%, 10%, 6%, 3% and 2%. 1) Calculate the average return for each stock 2) Calculate the standard deviation of monthly return for each stock. 3) Calculate the correlation coefficient b/w GM and Ford Stock. PLEASE SHOW ME THE STEPS. THANK YOU.
The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period. Month Madison Cookies Sophie Electric 1 -0.02 0.09 2 0.05 -0.03 3 -0.08 -0.11 4 0.12 0.17 5 -0.02 -0.04 6 0.03 0.02 Compute the following. Do not round intermediate calculations. Round your answers to four decimal places. Average monthly rate of return R̅i for each stock. Madison Cookies: Sophie Electric: Standard deviation of returns for each stock. Madison Cookies: Sophie Electric: Covariance between the rates of return. The correlation coefficient between the rates of return. Would these two stocks be good choices for diversification? Why or why not? Madison Cookies and Sophie Electric are -Select- choices for diversification as these assets have -Select- correlatio.
A company expects EPS to be $8.81 next year. The industry average P/E ratio is 34.84 and Enterprise multiple is 11.23. The EBITDA for the company is $20.78 million. What is an estimate of the stock price using the method of comparables for P/E multiples? Round your answer to two (2) decimal places.
The monthly rates of return for two corporations are given below:Month ABC Ltd. XYZ Ltd.January -.06 .09February .08 -.04March -.09 -.12April .14 .17May -.02 -.08June .05 .04Compute the following:a. Expected monthly rate of return [E(Ri)] for each stock. b. Standard deviation of returns for each stock. c. The covariance between the rates of return. d. The correlation coefficient between the rates of return.Considering the correlation coefficient, would these two stocks offer a good chance fordiversification? Why or why not?