The variance of stock A is 0.0035 and the return is 0.12, while B has the same return but 0.17 as standard deviation what is the coefficient of variation for stock A what is the coefficlent of variation for stock b

Q: Suppose Stock A has an expected return of 18% and a variance of 0.17, while Stock B has an expected…

A: Expected return of a portfolio is calculated as the sum of their weighted returns. It can be…

Q: A probability distribution of possible returns from a share has a variance of 0.0025. What is the…

A: Standard deviation is square root of variance. Standard deviation = √Variance

Q: In a regression of the single-index model, the R-square is 68%, residual variance is 0.08, beta…

A: R square = 68% = 0.68 residual variance (σe^2)= 0.08 Beta (B) = 0.7 Let σm^2 = Market variance

Q: 3. Consider three stocks A, B and C and a market index M with the following prices: Year то T1 T2…

A: Note: This question has several sub-parts. The first three have been answered below

Q: Stock W's standard coefficient of variance (CV) is Stock W’s Sharpe ratio assuming the risk-free is…

A: 1. Calculation of Stock W's Expected return and Standard Deviation State of Economy Probability…

Q: Consider the following returns. The variance on a portfolio that is made up of 56% Stock X and 44%…

A: Portfolio variance refers to the total deviation of portfolio returns from the average returns of…

Q: 3. Consider two stocks A and B with expected returns of 6% (stock A) and 8% (stock B). The matrix of…

A: "Hi, Thanks for the Question. Since you asked multiple sub part question, we will answer first three…

Q: of

A: Formula for correlation coefficient is: Corrwlation coefficient = Cov(A, B)/SD of A*SD of B Cov(A,B)…

Q: A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y. The covariance…

A: Weight of stock A (WX) = 0.50 Weight of stock B (WY) = 0.50 Covariance between stock X and stock Y…

Q: The market and Stock J have the following probability distributions: Probability rM rJ 0.3 15% 20%…

A: a) Expected Rates of return = Sum of (Probability * Return) b) Standard Deviation = square root of…

Q: Exercises: a. The standard deviation of returns is 0.30 for Stock A and 0.20 for Stock B. The…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: You have a portfolio of 4 stocks with equal shares invested in each stock. Variancesof individual…

A: a) A portfolio of 4 equally weighted stocks with variance being 16 and correlation between each pair…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Systematic risk refers to the risk of the entire segment of the industry or market.

Q: stock has a beta of 2.0. The correlation of the stock’s returns with the market is 0.5 and the…

A: The provided information are: Beta coefficient = 2.0 Correlation coefficient = 0.5  Variance of the…

Q: The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market…

A: Information Provided: Standard Deviation for Stock A = 40% Standard Deviation for market = 24%…

Q: Find Portfolio Variance: Assume stock A, stock B, stock C are real estate stocks in a portfolio…

A: Weight of A (Wa) = 20% Wb = 35% Wc = 45% Standard deviation of A (Sa) = 3.2% Sb = 3.5% Sc = 4%…

Q: The historical rate of return on stock A was regressed on the rate of return of stock M (the…

A: Solution- Total variance of security =standard deviation of security^2…

Q: tock A has a variance of 0.25 and stock B has a variance of 0.16. The correlation coefficient…

A: Portfolio variance is a measure of the dispersion of returns of a portfolio.

Q: The covariance of Security X's returns and Security Y's returns is 10, and the variance of Security…

A: Correlation = Cov(x,y)/(SDx*SDy) SD is standard deviation i.e. square root of variance.

Q: Stocks A B and C display the following parameters: Expected Return A  15%         Variance 9%2…

A: Expected return of A (Ra) = 15% Standard deviation of A (Sa) = Square root of variance = 3% Expected…

Q: Given Portfolio 1 Expected Return= 0.15 Portfolio variance = 0.001 Standard Deviation = 0.0316…

A: A portfolio is the combination of various financial assets into one basket with the aim to earn…

Q: Calculate the expected return, variance, and standard deviation for a portfolio of four equally…

A: The expected return of the portfolio is the return that an investor gets based on the weightage…

Q: The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market…

A: A beta coefficient shows the systematic risk or the risk related to the market. The beta coefficient…

Q: Stock A has a return variance (that is σ2) of 0.02. The market portfolio has a return variance of…

A: given, σA2=0.02σM2=0.03cov =  0.01ra=0.09rm=0.12wa=0.65wm=0.35

Q: The probability distributions of expected returns for stocks XMX and BMX are as follows: Probability…

A: Let Pn = Probability of each state Xn = Return of XMX in each state Bn = Return of BMX in each state…

Q: The expected value of a normal distribution of prices for a stock is $71. If you are 99 percent sure…

A: The normal distribution is assumed than it follows the probability of stock prices can be found from…

Q: . Find the Expected Return, Variance, and Standard Deviation for the Stock Returns 1 and 2. Also,…

A: Following table shows the calculations for expected returns of stock 1. to find the expected…

Q: The covariance of returns between Exxon Mobile Corporation (XOM) and Costco Wholesale Corporation…

A: Covariance and standard deviation are related through the coefficient of correlation between the two…

Q: the variance of stock A is .004, the variance of the market .007 and the covariance between the two…

A: Given that the variance of stock A is 0.004, and variance of the market is 0.007. First we need to…

Q: Consider two stocks M and N with a standard deviation of 25% and 40% respectively. The returns of…

A: Standard Deviation of M is 25% Standard Deviation of N is 40% Corrleation Coefficient is -1 Let…

Q: An asset has a beta of 0.9, The variance of returns on a market index, cr#, is 90. If the variance…

A: Risk simply means uncertainty related to the future. The future is unpredictable so there is a high…

Q: Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is…

A: Given:

Q: average monthly returnn, its return variance, standard deviation and betas

A: Average Monthly Returns: Average monthly returns are the amount which a firm expects to return from…

Q: Stock A has a variance of 0.25 and stock B has a variance of 0.16. The correlation coefficient…

A: A statistical measure that represents the spread among the return of the investment is term as the…

Q: A probability distribution of possible returns from a share has a variance of 0.0064.  What is the…

A: In the given question we are given variance of a probability distribution of possible returns from a…

Q: Freedman Flowers' stock has a 17% chance of producing a 43% return, a 43% chance of producing a -32%…

A: Using excel

Q: If the variance of the portfolio is 324, Coefficient of determination of the portfolio with market…

A: Systematic risk of a portfolio refers to the risk that affects entire market and not an individual…

Q: The last four years of returns for a stock are as shown here: a. What is the average annual return?…

A: Given: Year Return 1 -4.2% 2 28.1% 3 11.8% 4 3.6%

Q: Consider two stocks, Stock D, with an expected return of 13 percent and a standard deviation of 30…

A:

Q: beta of the stock is 0.54 and variance of the market is 256 percent square and the variance of stock…

A: Unsystematic Risk = Total risk - Systematic Risk Systematic Risk = Beta 2 * Variance of market =…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Variance of Stock: volatility  of stock is measured by variance of stock  How much a stock tends to…

Q: The variance of returns for a risky asset is 45%. The variance of the error term, Var(e) is 25%.…

A: Portfolio variance is a portfolio overall risk. It considers variances and weights of each asset in…

Q: The yield of stock A will be 0.30 with 40% probability and 0.50 with 60% probability. Stock B has a…

A: Expected return E(r) = ∑p*r Standard deviation = √∑p*(r-E(r))2  Expected return on portfolio E(Rp) =…

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.