The following are the historic returns for the Chelle Computer Company: Year Chelle Computer General Index 1 37 15 2 9 13 3 -11 14 4 8 -9 5 11 12 6 4 9 Based on this information, compute the following:        a. The correlation coefficient between Chelle Computer and the General Index. b. The standard deviation for the company and the index.     c. The beta for the Chelle Computer Company.

Q: he following are the monthly rates of return for Madison Cookies and for Sophie Electric during a…

A: a). Computation of average monthly rate of return (Ri)¯ for M cookies as follows: Average Return =…

Q: The stock market data given by the following table.     Correlation Coefficients       Telmex…

A: Computation of Domestic country beta is as follows:Domestic beta=SD of Telco×SD of…

Q: Use the following information on states of the economy and stock returns to calculate the standard…

A: Expected return = Probability * Return   Variance = Sum of( Squared deviation between return and…

Q: Given the re-stated information below (and expected returns you should have already calculated),…

A: State Prob (Pi) Return A (Ra) Return B (Rb) Pi(Ra) Pi(Rb) Dep 0.1 -0.25 0.04 -0.025 0.004 Rec…

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

A: Formulas:

Q: Use the following information on states of the economy and stock returns to calculate the expected…

A: The expected return can be calculated as sum of probability of state multiplied by respective…

Q: The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a…

A: a.Calculation of Average Monthly Rate of Return for each stock:The Average Monthly Rate of Return is…

Q: Consider the following annual returns of Molson Coors and International Paper:     Molson Coors…

A:

Q: The attached file contains hypothetical data for working this problem. Goodman Corporation’s and…

A: Here, In order to calculate beta with the given values, first, we need to calculate the average…

Q: An investor is considering investment into stocks and be listed on national stock exchange of India…

A: Unsystematic risk is “stock-specific” risk and systematic risk is “general-market” risk.    Total…

Q: The monthly rates of return for two corporations are given below: Month ABC Ltd. XYZ Ltd. January…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Returns for the Dayatech Company over the last 3 years are shown below. What's the standard…

A: A statistical measure that represents the variation in the return on the stock is term as the…

Q: Over the past 4 years an investment returned 0.1, -0.12, -0.08, and 0.13. What is the standard…

A: Return in year 1 is 0.1 Return in year 2 is -0.12 Return in year 3 is -0.08 Return in year 4 is 0.13…

Q: Consider the following Information regarding the performance of a money manager in a recent month.…

A: The performance of money manager is measured by comparing the return generated from the fund managed…

Q: The table given below reports last five years data on rates of return on two stocks. Calculate and…

A: Arithmetic mean = sum of returns

Q: The returns of Mazoon Company is as follows. Year 1=16, Year 2=(-11), Year 3=28, Year4=12. The…

A: Standard deviation refers to the variation or dispersion in the values of a data set. Standard…

Q: Between 1990 and 2000, the standard deviation of the returns for the NIKKEI and the DJIA indexes…

A: Formula for coefficient of correlation = Formula = Covariance / (standard deviation of NIKKEI *…

Q: ou are given the following information regarding prices for a sample of stocks. a. Construct a…

A: Price-Weighted Index = Sum of All Prices/Number of Stock Value-weighted Index = Total Value of…

Q: Characteristic Line and Security Market Line You are given the following set of data: Historical…

A: a) Beta co-efficient of a stock can be calculated using the formula as below:…

Q: GM stock produced the following monthly returns (Jan.- May): 5%, 8%. -2%, 12%and 15% Ford stock…

A: Standard deviation measures the dispersion of the data and is used to calculate the risk.…

Q: Discuss an explanation for this pattern that is consistent with the EMH. (ii)

A: SOLUTION:- It is a theory in financial economics which says that prices of assets reflect all the…

Q: Consider the following annual returns of Molson Coors and International Paper: Molson Coors…

A: A statistical measure that represents the variation in the return on the stock is term as the…

Q: Returns for the Dayton Company over the last 3 years are shown below. What's the standard deviation…

A: Using excel standard deviation formula (STDEV.S)  for sample standard deviation

Q: ercentages need to be entered in decimal format, for instance 3% would be entered as .03.)   Stock…

A: Hi, since you have posted a question with multiple sub-parts, I will answer the first 3, as per the…

Q: The following are the historic returns for the Beximco Computer company Year Beximo General index 1…

A: Calculation of correlation coefficient, standard deviation and beta of the company: Excel workings:

Q: eturns for the Dayton Company over the last 3 years are shown below. What's the standard deviation…

A: Information Provided: 2013 = 21.00% 2012 = -12.50% 2011 = 35.00%

Q: Consider the following returns and states of the economy for Neptune Corporation: Economy…

A: Given: Economy Probability(P) Return Weak 40% 2% Normal 50% 13% Strong 10% 32%

Q: What is the correlation coefficient of the returns of the stock and the returns of the market?

A: Correlation: It is a measure of statistics used to show the degree of association between two…

Q: I have a question and I literally don't know where to begin.  I am provided with a table of stock…

A: Let me explain to you, what you have been asked to do. But before that let me explain what…

Q: The return pattern on your favorite stock has been 5.39%, 8.26%, -12.04%, and 14.27% over the last…

A: In the given question we need to calculate average arithmetic and geometric rates of return from the…

Q: which stocks are undervalued or overvalued. a. Padma – 22 percent

A: Expected return from the portfolio is the weighted average of the return generated from the…

Q: a. The investment manager of Henry Securities quoted: 'GC Pharma has a very high beta since its…

A: Beta: It can be called a measure of a systematic or market risk of an investment or security when…

Q: Which of the following statements is FALSE? O a. For stocks, common practice is to use at least two…

A: Beta captures the systematic risk of the security. It is a measure of the stock's volatility in…

Q: You’ve observed the following returns on Pine Computer’s stock over the past five years: 14 percent,…

A: Let Rn be the return in year n. R1 = 14% R2 = - 14% R3 = 16% R4 = 26% R5 = 10%

Q: Macro Corporation has had the following returns for the past three years: -10 percent, 10 percent,…

A: YEAR RETURNS 1 -10% 2 10% 3 30%

Q: Calculate the standard deviation of the returns for Goodman, Landry, and the Market Index.  (Hint:…

A: Given information: The stock prices and dividends of Goodman industries, laundry incorporated and…

Q: Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal,…

A: Computation of standard deviation:Hence, the standard deviation is 21.71%.

Q: The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 15…

A: The formula to calculate mean value is given below:

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.