Correlation The historical rates of return for two companies XYZ and MNP are given below. a. Find correlation between returns of the two companies. b. What can you conclude about strength and direction of the two stocks' co- movements? Year XYZ MNP 1 40.00% 40.00% 2 -10.00% 15.00% 3 35.00% - 5.00% 4 - 5.00% -10.00% 5 15.00%

Correlation The historical rates of return for two companies XYZ and MNP are given below. a. Find correlation between returns of the two companies. b. What can you conclude about strength and direction of the two stocks' co- movements? Year XYZ MNP 1 40.00% 40.00% 2 -10.00% 15.00% 3 35.00% - 5.00% 4 - 5.00% -10.00% 5 15.00%

Name: Correlation The historical rates of return for two companies XYZ and
Uploaded: 2024-03-20T06:33:21.000Z
Channel: Bartleby
Description: Correlation The historical rates of return for two companies XYZ and MNP are given below.a. Find correlation between returns of the two companies. b. What can you concludeabout strength and direction of the two stocks' co - movements? Year XYZ MNP1

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 33MCQ: Selected information for Berry Company is as follows: Berrys return on equity rounded to the nearest...

See similar textbooks

Similar questions

Investment advisors estimated the stock market returns for four market segments: computers, financial, manufacturing, and pharmaceuticals. Annual return projections vary depending on whether the general economic conditions are improving, stable, or declining. The anticipated annual return percentages for each market segment under each economic condition are as follows: Assume that an individual investor wants to select one market segment for a new investment. A forecast shows improving to declining economic conditions with the following probabilities: improving (0.2), stable (0.5), and declining (0.3). What is the preferred market segment for the investor, and what is the expected return percentage? At a later date, a revised forecast shows a potential for an improvement in economic conditions. New probabilities are as follows: improving (0.4), stable (0.4), and declining (0.2). What is the preferred market segment for the investor based on these new probabilities? What is the expected return percentage?
Ratio Analysis MJO Inc. has the following stockholders equity section of the balance sheet: On the balance sheet date, MJOs stock was selling for S25 per share. Required: Assuming MJOs dividend yield is 1%, what are the dividends per common share? Assuming MJOs dividend yield is 1% and its dividend payout is 20%, what is MJOs net income?
Financial leverage MicrosoCortrepotied (MSFT) reported the following data (in millions) for a tern year Compute the profit margin, asset turnover, and financial leverage metrics using the expandedDuPont formula. Round profit margin, asset turnover, and financial leverage to two decimalplaces.Round return on stockholders’ equity to one decimal place.
Selected information for Berry Company is as follows: Berrys return on equity rounded to the nearest percentage point is: a. 20%. c. 28%. b. 21%. d. 40%.
Beta of stocks of Company SSAL is 1.2, company ABL is 0.9 and Company DSTL is 1. Which amongst the three companies would have higher return on Investment a.Company SSAL b.Company ABL c.Company DSTL d. The return on all three companies would be same
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.15 18 % Normal 0.45 9 % Weak 0.40 -4 % What is the stock's standard deviation? Do not round intermediate calculations. Round your answer to two decimal places.
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.15 20 % Normal 0.55 9 % Weak 0.30 -5 % What is the stock's expected return? Do not round intermediate calculations. Round your answer to two decimal places.
Covariance and Correlation The following table shows the expected returns from six different stocks in three different states of the economy: State of Economy Probability Return Stock A Return Stock B Return Stock C Return Stock D Return Stock E Return Stock F Growth 0.25 31% 3% 15% 21% 0% 18% Status Quo 0.50 21% 1% 3% 7% 4% 3% Recession 0.25 20% 4% -5% -6% 6% -4% Consider of a portfolio consisting of 50% in Stock E and 50% in Stock F. Calculate the covariance between Stocks E and F. Calculate the expected return of the portfolio. Calculate the standard deviation of the portfolio.
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?
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.25 18 % Normal 0.55 8 % Weak 0.20 -6 % Using excel: What is the stock's expected return? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's standard deviation? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's coefficient of variation? Do not round intermediate calculations. Round your answer to two decimal places.
(c) Consider information given in the table below and answers the question asked thereafter: iv. Calculate covariance and coefficient of correlation between the returns of the stocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfolio comprising of $35,000 invested in stock A and remaining amount in stock B. Calculate risk and return of your portfolio. (d) Firm A reports a Profit Margin of 6.5% and a Total Asset Turnover Ratio of 3.25. Their total asset level is $8,500,000. Assume there are 700,000 shares outstanding and the PE ratio is 11. Also, assume the Return on Equity is 16%. Based on this, calculate the MV/BV ratio.
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.25 22 % Normal 0.50 9 % Weak 0.25 -6 % What is the stock's expected return? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's standard deviation? Do not round intermediate calculations. Round your answer to two decimal places. % What is the stock's coefficient of variation? Do not round intermediate calculations. Round your answer to two decimal places.