Consider the following POPULATION of returns: 5%, -4%, -3%, and 12%. What is the standard deviation of this population of returns? O A. 0.42% B. 0.56% OC. 6.50% O D. 7.51%
Q: A probability distribution of possible returns from a share has a variance of 0.0025. What is the…
A: Standard deviation is square root of variance. Standard deviation = √Variance
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A: NOTE: As per our policy, we only answer up to one question when many are provided. Therefore the…
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A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…
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A: Month Returns 1 -3.51% 2 4.73% 3 4.11% 4 6.98% 5 3.92%
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A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
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A: Return in year 1 (R1) = 7% R2 = 3% R3 = 19% R4 = -11% R5 = -1% Let R = Average return
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Q: Standard Deviation %
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A: Given:
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A: Information Provided: 2013 = 21.00% 2012 = -12.50% 2011 = 35.00%
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A: Standard Deviation: It is a measure of statistics measuring the dispersion relative to the mean.
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A: Expected Return = Probability * Return
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.
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- Use the following information to compute the standard deviation of returns: Yearly Returns Year Return (%) 1 19 2 1 3 10 4 26 5 4 a. 12% b. 10.42% c. 0.87% d. 108.5%a. The standard deviation of returns is 0.30 for Stock A and 0.20 for Stock B. The covariance betweenthe returns of A and B is 0.006. The correlation of returns between A and B is:Which one of the following is defined as the average compound return earned per year over a multiyear period? Multiple Choice A Geometric average return B Variance of returns C Standard deviation of returns D Arithmetic average return E. Normal distribution of returns
- Assume the mean and standard deviation of sample returns are 8% and 10% respectively. Assuming that the returns are normally distributed, what is the probability of an actual return below 8%?An investor experiences the following 5 annual returns. Calculate the sample variance of these returns. Write down the sample standard deviation, leaving your answer under the radical symbol. A)2% B)-3% C)-3% D)-2% E)1%Here are the estimated ROE distributions for Firms A, B, and C: Probability 0.1 0.2 0.4 0.2 0.1 Firm A: ROEA 0.0% 5.0% 10.0% 15.0% 20.0% Firm B: ROEB (2.0) 5.0 12.0 19.0 26.0 Firm C: ROEC (5.0) 5.0 15.0 25.0 35.0 Calculate the expected value and standard deviation for Firm C’s ROE. ROEA =10.0%, σA =5.5%; ROEB =12.0%, σB =7.7%. Discuss the relative riskiness of the three firms’ returns. (Assume that these distributions are expected to remain constant over time.) Now suppose all three firms have the same standard deviation of basic earning power (EBIT/Total Assets), σA = σB = σC =5.5%. What can we tell about the financial risk of each firm?
- Use the following information to compute the standard deviation of returns: Yearly Returns Year Return (%) 1 19 2 1 3 10 4 26 5 4Macro Corporation has had the following returns for the past three years: -10 percent, 10 percent, and 30 percent. Use the following formulas to calculate the standard deviation of the returns: Multiple Choice 10.00 percent 16.33 percent 18.21 percent 30.00 percentIf the standard deviation of stock 'A' is .25, the standard deviation of stock 'B' is .30, and the correlation between stocks 'A' and 'B' is 0.7, the covariance between stocks 'A' and 'B' is___.
- In a simple linear regression based on 20 observations, it is found b1 = 3.05 and se(b1) = 1.30. Consider the hypothesis : H0 : β1 = 0 and HA : β1 ≠ 0 . Calculate the value of the test statistic.a. Using the data in the table below alculate the following performance measures.i. Sharpe ratioii. Treynor measureiii. Jensen’s alphaiv. M-squared measurev. T-squared measure, andvi. Appraisal ratio (information ratio) Fund Average return Standard Deviation Beta coefficient Unsystematic Risk A 0.240 0.220 0.800 0.017 B 0.200 0.170 0.900 0.450 C 0.290 0.380 1.200 0.074 D 0.260 0.290 1.100 0.026 E 0.180 0.400 0.900 0.121 F 0.320 0.460 1.100 0.153 G 0.250 0.190 0.700 0.120 Market 0.220 0.180 1.000 0.000 Risk free return 0.050 0.000 b. Out of the performance measures you calculated in part a., which one would you use undereach of the following circumstances:i. You want to select one of the funds as your risky portfolio.ii. You want to select one of the funds to be mixed with the rest of your portfolio,currently composed solely of holdings in the market-index fund.iii. You want to select one of the funds to form an actively managed stock portfolioA probability distribution of possible returns from a share has a variance of 0.0064. What is the standard deviation of this probability distribution? a. 0.08 b. 0.64 c. 8% d. Both (a) and (c)