Security with normally distributed returns has an annual expected return of 10% and a standard deviation of 6%. The probability of getting a return between -1.76% and 21.76% in any one year is
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- "A security with normally distributed returns has an annual expected return of 15% and standard deviation of 9%. The probability of getting a return between -2.64% and 32.64% in any one year is _______ Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"An asset has an average return of 11.45 percent and a standard deviation of 24.36 percent. What is the most you should expect to lose in any given year with a probability of 2.5 percent?Suppose the next month rate of return on a portfolio (worth $1M) is distributed as follows. Return Rate -0.05 -0.03 -0.01 0.00 0.01 0.03 0.04 0.07 0.10 0.12 Probability 1% 1.5% 2.5% 5% 10% 20% 25% 20% 10% 5% What is the expected rate of return given that the return is known to be greater than or equal to 4%?
- Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.2 percent and the standard deviation was 10.6 percent. a. What is the probability that your return on this asset will be less than –9.7 percent in a given year? Use the NORMDIST function in Excel® to answer this question. b. What range of returns would you expect to see 95 percent of the time? c. What range of returns would you expect to see 99 percent of the time?.An analyst believes that economic conditions during the next year will either be strong, normal, or weak, and she thinks that the Corrigan Company's returns will have the following probability distribution. Conditions Probability (%) Return (%) Strong 30 30 Normal 40 15 Weak 30 -10 What is Corrigan’s expected return? What is Corrigan’s standard deviation of returns?I. Consider the following information about K oll and Nell for one-time period: Suppose that the correlation coefficient between the returns for Koll and Nell is -0.40'. If you invest 30% in Koll and 70% in Nell, what are the expected return and standard deviation of the portfolio? Interpret your results. II. The investor achieved the following annual rate of returns over the last four-year period: 25% in Y1, 15% in Y2, 20% in Y3, 10% in Y4. (a) Calculate the geometric average rate of return for the whole 4 year period. (b) Calculate the logarithmic average rate of return for the whole 4 year period. III. Suppose you have a portfolio of IBM and Dell with a beta of 0.4 and 1.1, respectively. If you put 40% of your money in IBM, 55% in Dell and 5% in the risk-free asset, calculate and interpret the beta of your portfolio. IV. Suppose that the beta value for Kei is 1.5, and the risk-free rate of interest is 4%. The investor wishes to (i) have a shareholding in only one company, Kei, and…
- Let us consider the following scenario: two years in a row, the yearly yields on a bank account are independent random values taken from distributions with means of 6.1% and 8.9%, respectively. Moreover, suppose that the yield variances in these years approximate to 0.011^2 and 0.023^2Therefore, if an investor deposits £7,500 at the start of every year, figure out the anticipated total amount in the bank account at the end of the second year and the standard deviation of the total amount in the bank account at the end of the second yearWhat is the approximate standard deviation of returns if over the past 4 years an investment returned 8.0%, -12.0%, -12.0%, and 15.0%?Your portfolio has provided you with returns of 8.6 percent, 14.2 percent, -3.7 percent, and 12.0 percent over the past four years. respectively. What is the geometric average return for this period? a). 7.78%b). 5.99%c). 7.54%
- A portfolio has an expected annual return of 14.9 percent and a standard deviation of 18.5 percent. What is the smallest expected loss over the next 25 days given a probability of 1.0%? Note 1.0% =z=2.326 A. -8.25% B. -10.25% C. -12.25% D. -14.25%a. Given the following holding-period returns, LOADING... , compute the average returns and the standard deviations for the Zemin Corporation and for the market. b. If Zemin's beta is 1.87 and the risk-free rate is 6 percent, what would be an expected return for an investor owning Zemin? (Note: Because the preceding returns are based on monthly data, you will need to annualize the returns to make them comparable with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) c. How does Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk? Month Zemin Corp. Market 1 5 % 6 % 2 2 1 3 2 0 4 −4 −1 5 4 3 6 3 4The following table shows the one-year return distribution of Startup, Inc. Calculate: 1. The expected return. 2. The standard deviation of the return. Probability 40% 20% 20% 10% 10% Return - 100% - 75% - 50% - 25% 1000%