The market and Stock ) have the following probablity distributions: Probability TH 0.3 14% 19% 0.4 10 0.3 17 11 a. Calculate the expected rate of returm tor the market. Round your answer to two decimal places. Calculate the expected rate of retum for Stock ). Round your answer to two decimal places. b. Calculate the standard deviation for the market. Do ot round intermediate calculations. Round your answer to two deimal places Calculate the standard deviation for Stock 1. Do not round intermediate calculations Round your answer to two decimal places.

The market and Stock ) have the following probablity distributions: Probability TH 0.3 14% 19% 0.4 10 0.3 17 11 a. Calculate the expected rate of returm tor the market. Round your answer to two decimal places. Calculate the expected rate of retum for Stock ). Round your answer to two decimal places. b. Calculate the standard deviation for the market. Do ot round intermediate calculations. Round your answer to two deimal places Calculate the standard deviation for Stock 1. Do not round intermediate calculations Round your answer to two decimal places.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 1P

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Similar questions

An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?
Calculate the correlation coefficient between Blandy and the market. Use this and the previously calculated (or given) standard deviations of Blandy and the market to estimate Blandy’s beta. Does Blandy contribute more or less risk to a well-diversified portfolio than does the average stock? Use the SML to estimate Blandy’s required return.
You have observed the following returns over time: Assume that the risk-free rate is 6% and the market risk premium is 5%. What are the betas of Stocks X and Y? What are the required rates of return on Stocks X and Y? What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y?
The following table reports the percentage of stocks in a portfolio for nine quarters: a. Construct a time series plot. What type of pattern exists in the data? b. Use trial and error to find a value of the exponential smoothing coefficient that results in a relatively small MSE. c. Using the exponential smoothing model you developed in part (b), what is the forecast of the percentage of stocks in a typical portfolio for the second quarter of year 3?