Q: Consider $10m invested in a stock. The annual volatility of the rate of return is 25%. Assuming that…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: Your investment has a 40% chance of earning a 15% rate of return, a 50% chance of earning a 10% rate…
A: Given: 40% probability of earning 15% 50% probability of earning 10% 10% probability of losing 3%
Q: An investment has a 20% chance of producing a 25% return, a 60%chance of producing a 10% return, and…
A: Computation:
Q: 3. Consider assets A and B with expected returns of E(RA)=12% and E(RB)=20% and standard deviations…
A: Expected return of A=E(Ra) = 12% Expected return of B = E(Rb) = 20% Standard deviation of A = SDa =…
Q: The market risk premium is 15% and the risk-free rate is 5%. The beta of Asset D is 0.2. What is…
A: IN this question we require to calculate the Asset D's Expected return under CAPM:
Q: Asset A has a reward to risk ratio of.o6 and a beta of 1.2. The risk-free rate is 4%. What is the…
A: Calculate the reward to risk ratio as follows: Reward to risk ratio = (Expected return - risk free…
Q: ould it sell for in order to yield a 7.5% nominal return on the investment? O $522,150 O $542,487…
A: Bonds are the debt obligations of a business on which it requires to pay regular interest to the…
Q: Assume that an investment is forecasted to produce the following returns: a 20% probability of a 12%…
A: We have the following information: Forecasted returns of an investment: 20% probability of a 12%…
Q: Asset A has an expected return of 22.8% and a beta of 1.8. The expected market return is 14%. What…
A: The risk free rate can be calculated as per the capital asset pricing model.
Q: Asset A has an expected return of 10%. The expected market return is 14% and the risk-free rate is…
A: The calculation is shown: Hence, answer C is the correct option.
Q: An investment has the following possible returns: Return: 13%; Probability: 40% Return: 8%;…
A: The expected return is the minimum required rate of return which an investor required from the…
Q: Assume that Rf = 6 percent and the market risk premium (Km - Rf) is 7.0 percent. Compute Kj for the…
A: In this question we require to compute the Kj i.e. expected return of a stock where, Rf = 6% Market…
Q: Suppose an investment is equally likely to have a 37.9% return or a -20% return. The total…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: If E(rX)=0.12 and E(rY)=0.08, what would be the expected rate of return of a portfolio made of 30%…
A: Given the following information: Expected return from investment X = 0.12 Expected return from…
Q: For an investment in a stock, the probability of the return being -10.0% is 0.3, 10.0% is 0.4, and…
A: Information Probability Return 0.3 -10% 0.4 10% 0.3 30%
Q: f a fund has a return of 12% and a standard deviation of 15%, and if the risk-free rate is 2%, then…
A: Sharpe ratio measures risk premium of an asset per unit of risk.
Q: The following table shows the one-year return distribution of Startup, Inc. Calculate: 1. The…
A: The expected return is the benefit or loss that an investor may derive from a given investment. An…
Q: Two assets, Q & R, each have a standard deviation of 10%. Asset Q's expected return is 8.5% and…
A: The rate of return that an investor is expected to earn from the investment is term as the expected…
Q: If you have a weighted value of 12.8% and a return of 16% what is the probability? a. 10% 129/
A: Given: Weight = 12.8% Return = 16%
Q: An optimal risk portfolio’s expected return is 14%, standard deviation is 22%. If risk-free rate is…
A: The tradeoff between the return and risk of the portfolio is measured by the slope of CAL(Capital…
Q: Risk-free rate is 7% 2. Calculate the required rate of return for A. 1. 8.90% 2. 8.40% 3. 8.70% 4.…
A: Required return is sum product of expected return and respective probability. Required return = ∑p*R…
Q: D modified) rnatives have the following returns and standard deviations of returns. Returns:…
A: Co-efficient of Variance - This represent the propotionate risk. When both return and risk are…
Q: If the risk-free rate is 4.8 percent and the risk premium is 6.8 percent, what is the required…
A: Required Return: It is the rate of return which is the least satisfactory return an investor may…
Q: CAPM Required Return A company has a beta of .99. If the market return is expected to be 10.4…
A: Required Return: It is the rate of return which is the least satisfactory return an investor may…
Q: Required Rate of ReturnSuppose rRF 5 5%, rM 5 10%, and rA 5 12%.a. Calculate Stock A’s beta.b. If…
A: Given information: Risk free rate (rf) is 5% Market return is (rm) is 10% Required rate of return…
Q: Given the following probability distribution, compute for Outcome Probability Expected Return 20%…
A: As information expected return is as follows: Probability Return Expected return A B C=A*B…
Q: An investment has an expected return of 10% with standard deviation of 25%. What is the value at…
A: Given: Expected return = 10% Standard deviation = 25%
Q: What is the expected return on asset A if it has a beta of 0.5, the expected market return is 13%,…
A: The expected return on the asset can be calculated as per capital asset pricing model.
Q: three assets. The first one has expected return of 10% and standard deviation of return of 0.14.…
A: Every asset has some probability and return so that it's expected return (mean) and risk ( standard…
Q: The Manhawkin Fund has an expected return of 16% and a standard deviation of 20%. The risk-free rate…
A: Given: Expected return = 16% = 0.16 Standard deviation = 20% = 0.20 Risk-free rate = 4% = 0.04
Q: Consider the following returns and states of the economy for TZ.Com.: Economy Probability…
A: Firstly, Variance has to be calculated through following steps:
Q: Assume that Rf = 6 percent and the market risk %3D premium (Km - Rf) is 7.0 percent. Compute Kj for…
A: Given details are : Rf = Risk free rate = 6% (Km - Rf) = Market risk premium = 7.0% Beta = 1.9 From…
Q: A company has a beta of 0.25. If the market return is expected to be 8 percent and the risk-free…
A: Solution: Required rate of return = Rf + Beta (Rm - Rf) Company's required rate of return is the…
Q: The risk-free rate is 10% and expected rate of return is 18%. The beta is 12 and standard deviation…
A: Sharpe ratio refers to the financial indicator of the performance of the fund (or security) in terms…
Q: You have the following information: A B Market Alpha 1.85% 2% |-2.36% 0% Beta 1.36 0.95 1.98 Res.…
A: The formula used is shown:
Q: If the risk-free rate is 3.80 percent and the risk premium is 2.8 percent, what is the required…
A: RISK PREMIUM = EXPECTED RETUN - RISK FREE RATE SO, REQUIRED RETURN = RISK FREE RATE + RISK PREMIUM…
Q: The market risk premium is 15% and the risk-free rate is 5%. The beta of Asset D is 0.2. What is…
A: Following details are given in the question: Beta of Asset D = 0.2 Market Risk premium = 15% Risk…
Q: Required Return If the risk-free rate is 10.2 percent and the market risk premium is 4.4 percent,…
A: Given that:Risk free rate is 10.2%Market Risk Premium is 4.4%
Q: Assume that Rf = 6 percent and the market risk premium (Km - Rf) is 7.0 percent. Compute Kj for the…
A: In this question we require to compute the Kj i.e. expected return.
Q: 2. The rate of retum expectation for the common stock of ABC company đuring the next year are:…
A: Using excel
Q: If the first increment (B-A) AROR is 6.3%, and 2hd increment (C-B) AROR is 3.1%. The best…
A: Incremental rate of return Analysis It is the analysis of financial return to investor where…
Q: Consider the following returns and states of the economy for TZ.Com.: EconomyProbabilityReturn 2%…
A: Expected Return = Probability * Return
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- An asset has an average return of 10.11 percent and a standard deviation of 19.02 percent. What range of returns should you expect to see with a 68 percent probability? Multiple Choice −18.42% to 38.64% −46.95% to 67.17% −8.91% to 11.31% −27.93% to 48.15% −8.91% to 29.13%For investment A, the probability of the return being 20.0% is 0.5, 10.0% is 0.4, and -10.0% is 0.1 Compute the standard deviation for the investment with the given information. (Round your answer to one decimal place.) a. 85.00% b. 15.00% c. 34.00% d. 17.00% e. 9.00%Suppose that the returns on an investment are normally distributed with an expected return of 16% and standard deviation of 3%. What is the likelihood of receiving a return that is equal to or less than 19%? (Hint: the area under a curve for 1 std dev is 34.13%, 2 std dev is 47.73% and 3 std dev is 49.87%.).
- An asset has an average return of 11.15 percent and a standard deviation of 23.91 percent. What is the most you should expect to earn in any given year with a probability of 2.5 percent? Multiple Choice 82.88% 70.93% 47.02% 35.06% 58.97%Assume that an investment is forecasted to produce the following returns: a 20% probability of a 12% return; a 50% probability of a 16% return; and a 30% probability of a 19% return What is the standard deviation of return for this investment? A) 5.89% B) 16.1% C) 2.43% D) 15.7%The standard deviation of return on investment a is 0.10, while the standard deviation of return on investment b is 0.04. If the correlation coefficient between the returns on A and B is_____________. A. -0.0447 B. -0.0020 C. 0.0020 D. 0.0447
- An asset has an average return of 11.15 percent and a standard deviation of 22.89 percent. What is the most you should expect to earn in any given year with a probability of 16 percent? 11.74% 57.52% 34.04% 34.63% 23.19%If beta of Stock A with market is 0.72 and and the market variance is 225 , the covariance between A and B is 202.5, beta of stock B with market is a. 1.10 b. 0.81 c. 1.20 d. 1.25Here 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?
- A 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)Asset P has a beta of 0.9. The risk-free rate of return is 8 percent, while the return on the market portfolio of assets is 14 percent. The asset's required rate of return isThe expected annual returns are 15% for investment 1 and 12% for investment 2. The standard deviation of the first investment’s return is 10%; the second investment’s return has a standard deviation of 5%. Which investment is less risky based solely on standard deviation? investment 1 or 2 Which investment is less risky based on coefficient of variation? investment 1 or 2
