Sandy Corp believes the following probability distribution exists for its stock. What is the coefficent of variation on the company's stock ? Probability Stock's state of Of state Expected the economy Occuring ReturnBoom 0.45 25%Normal 0.50 15%Recession 0.05. 5% 2. Sandy Corp believes the following probability distribution exists for its stock. What is thecoefficient of variation on the company's stock?(4 Marks)ProbabilityState ofthe EconomyStock'sof StateExpectedReturnOccurringBoom0.4525%Normal0.5015%Recession0.055%Answer:

The question is to find expected return and variance of stock in different situation and probability…

Sandy Corp believes the following probability distribution exists for its stock. What is the coefficent of variation on the company's stock ? Probability Stock's state of Of state Expected the economy Occuring Return Boom 0.45 25% Normal 0.50 15% Recession 0.05. 5%

Sandy Corp believes the following probability distribution exists for its stock. What is the coefficent of variation on the company's stock ? Probability Stock's state of Of state Expected the economy Occuring Return Boom 0.45 25% Normal 0.50 15% Recession 0.05. 5%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 21MC

See similar textbooks

Related questions

Q: Given the following information, what is the standard deviation for VirtVaccine Inc.'s stock?…

A: Computation:

Q: An investment analyst estimates the following probabilities of return depending on the state of the…

A: Sharpe ratio is a financial measure which measure the risk adjusted return if the given portfolio.

Q: Quantitative Problem: You are given the following probability distribution for CHC Enterprises:…

A: An investor uses measures such as expected return, standard deviation, and coefficient of variation…

Q: XYQ Co. believes the following probability distribution exists for its stock. What is the…

A: Formulas:

Q: The following table is an analyst's best guess for the likelihood of various states of the economy…

A: Economy Probability (%) Ideal 0.2 20.0 Good 0.4 15.0 Fair 0.3 8.0…

Q: Assume the economy has an 6 percent chance of booming, am 8 percent chance of being recessionary,…

A: The ER of stock could be computed using the probabilities of the state of the economy and…

Q: Mystery Motors, Inc. stock has the following forecasted returns for various states of the economy:…

A: Here, To Find: Standard deviation =?

Q: An investor is interested in purchasing XYZ share which is currently trading at a market price of…

A: The per share dividend can be calculated with the help of dividend discount model.

Q: Roenfeld Corp believes the following probability distribution exists for its stock. What is the…

A: Coefficient of Variation = Standard Deviation / Mean

Q: Here are forecasts for next year for two stocks: Stock A Stock B Return on equity 17 %…

A: dividend payout ratio is the percent of net income paid as dividend. it shows that how much company…

Q: ven the following information for the stock of Foster Company, calculate the risk premium on its…

A: Price of Stock(Po) = Dividend per share next year(D1)/(Expected return - Dividend growth rate)…

Q: XYZ stock's returns will have the following probability distribution during the possible states of…

A: a) Expected Return = Square root of sum of (Probability * Return) b) Standard Deviation = Square…

Q: Expected dividend yield 5%

A: Ans. D.stock X pays higher dividend per share than stock y

Q: Assume the real return in the economy is 4 percent. It is anticipated that the consumer price index…

A: Real Return = 4% Consumer Price Index Start = 200 Consumer Price Index End = 210 Expected Inflation…

Q: Here are forecasts for next year for two stocks: Stock A Stock B Return on equity 18 %…

A: The growth rate of dividends can be computed by finding the retention ratio and multiplying it with…

Q: Assume these are the stock market and Treasury bill returns for a 5-year period: ITT Stock Market…

A: Risk premium is the extra return that the investor expects to get for bearing the risk on a stock.

Q: Factor Models Suppose a three-factor model is appropriate to describe the returns of a stock.…

A: Given:

Q: The Graber Corporation's common stock has a beta of 1.6. If the risk-free rate is 4.7% and the…

A: Following details are given in the question for Graber Corporation: Beta = 1.6 Risk free rate = 4.7%…

Q: You have been given this probability distribution for the holding-period return for KMP stock: HPR…

A: economy probability HPR boom 0.3 18% normal 0.5 12% recession 0.2 -5%

Q: Given the following probable states of the economy and the expected return on a security in each…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: A stock is expected to return 13 percent in an economic boom, 10 percent in a normal economy, and 3…

A: Expected Return = Sum of probablity * returns

Q: Tiger Corp's stock had a required return of 11.75% last year, when the risk-free rate was 4.50% and…

A: The rate of return is the amount that the investors are expected against the amount invested.…

Q: Shepherd's Flock stock is expected to produce the following returns given the various states of the…

A: The computation of the expected return is shown below: Hence, the expected return on this stock is…

Q: An analyst gathers the following information about a company and the market: Current market…

A: Current stock price (P0) = €38.00 Last dividend (D0) = €2.50 Payout ratio = 30% ROE = 12% Growth…

Q: Stock W has the following returns for various states of the economy: State of the Economy…

A: Expected Return and Standard deviation of the Stock is determined using the below formula: Expected…

Q: Northern Wear stock has an expected return of 14.6 percent. Given the information below, what is the…

A: Probability of Recession (Pr) = 0.15 Probability of Normal (Pn) = 0.80 Probability of Boom (Pb) =…

Q: Given the following information for the stock of CPA Corporation, calculate its beta Current price…

A: We know that Required return /cost of equity = [Expected dividend in next year/current Market…

Q: Given the following information for the stock of Foster Company, calculate the risk premium on its…

Q: What is the standard deviation of the returns on a stock given the following information? State…

A: Let's first calculate the expected return (Re). Let Pn and Rn be the probability and return for…

Q: Blue Bell stock is expected to return 23 percent in a boom, 16 percent in a normal economy, and lose…

A: Expected Return (E(X)) = 0.23*0.05 + 0.16*0.90 - 0.32*0.05 = 0.0115 + 0.144 - 0.016 = 0.1395

Q: An investor is interested in purchasing XYZ share which is currently trading at a market price of…

A: Market price = P 200 Intrinsic value (P0) = 200-50 = P 150 Growth rate (g) = 2% Required return (r)…

Q: Stock W has the following returns for various states of the economy: State of the Economy…

A: State of the Economy Probability Stock W's Return Recession 0.15 -10% Below Average 0.2 5%…

Q: Compute standard deviation for this stock.

A: Given:- State of Economy Probability Expected Return Recession 10% -30% Below Average 20%…

Q: Given the following information for the stock of Foster Company, calculate the risk premium on its…

A: Current price (P0) = $ 49.78 Next dividend (D1) = $ 3.42 Growth rate (g) = 8.2% Risk free rate (Rf)…

Q: Consider the following probability distrībution of retums for Alpha Corporation: Current Stock Stock…

A: Introduction: The expected return of stock refers to the return that is anticipated on a stock. A…

Q: An analyst has estimated how a particular stock’s return will vary depending on what will happen to…

A: The coefficient of variation is the standard deviation of the returns of the stock divided by the…

Q: Ice Company stock has a beta of 1.92, the current risk-free rate is 5.17 percent, and the expected…

A: Beta = 1.92 Risk free rate = 5.17% Market return = 15.17%

Q: An investment analyst estimates the following probabilities of return depending on the state of the…

A: Step1: Risk Risk: It refers to an outcome of uncertainty, which is non-predictable in nature. In…

Question

Sandy Corp believes the following probability distribution exists for its stock. What is the coefficent of variation on the company's stock ?

Probability Stock's

state of Of state Expected

the economy Occuring Return

Boom 0.45 25%

Normal 0.50 15%

Recession 0.05. 5%

2. Sandy Corp believes the following probability distribution exists for its stock. What is the
coefficient of variation on the company's stock?
(4 Marks)
Probability
State of
the Economy
Stock's
of State
Expected
Return
Occurring
Boom
0.45
25%
Normal
0.50
15%
Recession
0.05
5%
Answer:

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

8 Roenfeld Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company's stock? State of the Economy Boom Normal Recession O 0.4447 O 0.5114 O 0.4891 O 0.4002 O 0.3335 Probability of State Occurring 0.29 0.50 0.21 Stock's Expected Return 25% 15% 5%
XYQ Co. believes the following probability distribution exists for its stock. What is thecoefficient of variation on the company's stock? (Please state your answer in 2 decimal digitpoints)Economy Probability Return (%)Boom 0.45 25Normal 0.50 15Recession 0.05 5
Ripken Iron Works believes the following probability distribution exists for its stock. What is the coefficient of variation on the company's stock?State of the EconomyProbability of State OccurringStock's Expected ReturnBoom0.2525%Normal0.5015%Recession0.25
What is the standard deviation of the returns on a stock given the following information? Could you please show the work? State of Economy Probability of state of Economy Rate of return if state occurs Boom 0.3000 0.1500 Normal 0.6500 0.1200 Recession 0.0500 0.0600 Average 0.3333 0.1100
What is the standard deviation of the returns on a stock given the following information? State of Economy Probability of State of Economy Rate of Return if State Occurs Boom .08 .171 Normal .70 .076 Recession .22 .017
You were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 35.00% 26.80% Normal 46.00% 13.95% Recession 19.00% 7.55%
You were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 25.00% 24.15% Normal 46.00% 17.40% Recession 29.00% 6.20% Group of answer choices
You were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 30.00% 20.60% Normal 51.00% 15.65% Recession 19.00% 7.95% A. 0.2753 B. 0.1927 C. 0.3166 D. 0.3304 E. 0.2478
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.67 P0 = $27.50; g = 8.00% (constant). Float on new issues is 5% of market price. What is the cost of issuing common stock?
You were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock? State of the Economy Probability of State Occurring Stock's Expected Return Boom 35.00% 26.80% Normal 46.00% 13.95% Recession 19.00% 7.55%
2. What is the standard deviation of the returns on a stock given the following information? State of Economy Probability of state of Economy Rate of return if state occurs Boom 30% 15% Normal 65% 12% Recession 5% 6% Average 33% 11%
Today, a firm has a stock price of $14.26 and an EPS of $1.15. Its close competitor has an EPS of $0.48. What would be the expected price of the competitor's stock if estimated using the method of comparables? Do not include a dollar sign in your answer.