eBook Problem Walk-Through A stock's returns have the following distribution: PIT Probability of this Demand Occurring Demand for the Rate of Return if Company's Products this Demand Occurs Weak 0.1 (36%) Below average 0.1 (14) Average 0.4 13 Above average 0.3 29 Strong 0.1 49 1.0 Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation:

eBook Problem Walk-Through A stock's returns have the following distribution: PIT Probability of this Demand Occurring Demand for the Rate of Return if Company's Products this Demand Occurs Weak 0.1 (36%) Below average 0.1 (14) Average 0.4 13 Above average 0.3 29 Strong 0.1 49 1.0 Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A stock’s returns have the following distribution:Demand for theCompany’s ProductsProbability of thisDemand OccurringRate of Return if thisDemand OccursWeak 0.1 (30%)Below average 0.1 (14)Average 0.3 11Above average 0.3 20Strong 0.2 451.0Assume the risk-free rate is 2%. Calculate the stock’s expected return, standard deviation,coefficient of variation, and Sharpe ratio.
(1) if stock 1 provides 10% rate of return and stock 2 expects 30% rate of return. what can we say about this scenerio regarding the consistency in the efficent market hypo? which stock (if any) is more risky?
Consider the following data State of Nature Prob. Stock A Return Boom 0.3 16.00% Normal 0.6 14.20% Recession 0.1 8.00% What is the expected return for Stock A? Group of answer choices 14.12% 12.14% 15.12% 14.00%
Please also explain calculations/steps. A stock's returns have the following distribution: Demand for theCompany's Products Probability of ThisDemand Occurring Rate of Return IfThis Demand Occurs Weak 0.1 (20%) Below average 0.1 (5) Average 0.5 15 Above average 0.2 27 Strong 0.1 50 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio:
What is the required return for each stock? What is required return for stock B? Scenario Probability Stock A Stock B Market Risk-free rate Bust 0.25 -0.15 -0.05 Normal 0.55 0.2 0.1 Boom 0.2 0.4 0.3 Beta 1.2 0.9 Expected return 0.13 0.05
A stock's returns have the following distribution: Demand for theCompany's Products Probability of ThisDemand Occurring Rate of Return IfThis Demand Occurs Weak 0.1 (42%) Below average 0.1 (10) Average 0.4 14 Above average 0.3 35 Strong 0.1 48 1.0 Assume the risk-free rate is 3%. With excel, calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio:
Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places ng distribution: Demand for theCompany's Products Probability of thisDemand Occurring Rate of Return ifthis Demand Occurs Weak 0.1 (20%) Below average 0.1 (13) Average 0.3 18 Above average 0.3 40 Strong 0.2 64 1.0
Thecovarianceofthemarket'sreturnwithaStockA'sreturnis0.003andthestandarddeviation of the market's return is 0.05. Stock A's beta is ________. The risk free rate is 6% and the expected market return is 15%. Stock A's current price is $25 and will pay a $1 dividend at the end of the year. If the stock is priced at $30 at year-end, it is _______. a) 1.2; underpriced, so buy it. b) 1.5; underpriced, so buy it. c) I .2; overpriced, so sell it. d) 1.5; overpriced, so sell it. e) None of the above
The risk-free rate is 1.13% and the market risk premium is 6.26%. A stock with a β of 0.84 will have an expected return of ____%. Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Stock Rit Rmt ai Beta C 12 10 0 0.8 E 10 8 0 1.1 Rit = return for stock i during period t Rmt = return for the aggregate market during period t What is the abnormal rate of return for Stock C during period t using only the aggregate market return (ignore differential systematic risk)?
A stock has an expected return of 0.15, its beta is 0.52, and the expected return on the market is 0.08. What must the risk-free rate be? (Hint: Use CAPM) Enter the answer in 4 decimals e.g. 0.0123.
A stock's return has the following distribution: Demand for theCompany's Products Probability of ThisDemand Occurring Rate of Return if ThisDemand Occurs (%) Weak 0.1 -20 % Below average 0.2 -8 Average 0.4 17 Above average 0.2 35 Strong 0.1 65 1.0 Calculate the stock’s expected return and standard deviation. Do not round intermediate calculations. Round your answers to two decimal places. Expected return: % Standard deviation: %

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