When the overall market experiences a decline of 8%, an investor with a portfolio of aggressive stocks will probably experience: A) Portfolio losses of less than 8%. B) Portfolio losses greater than 8%. C) Portfolio gains of less than 8%.
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12. When the overall market experiences a decline of 8%, an investor with a portfolio of aggressive stocks will probably experience:
A) Portfolio losses of less than 8%.
B) Portfolio losses greater than 8%.
C) Portfolio gains of less than 8%.
D) Portfolio gains greater than 8%.
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- 1.Blue Bell stock is expected to return 20% percent in a boom, 10% percent in a normal economy, and lose 2 percent in a recession. The probabilities of a boom, normal economy, and a recession are 7 percent, 89 percent, and 4 percent, respectively. What is the standard deviation of the returns on this stock?Subject: Financial strategy & policy 8-6: A stock had a 12% return last year, a year when the overall stock market declined. Does this mean that the stock has a negative beta and thus very little risk if held in a portfolio? Explain. 8-7: If investors’ aversion to risk increased, would the risk premium on a high-beta stock increase by more or less than that on a low-beta stock? Explain. 8-8: If a company’s beta were to double, would its required return also double?A stock will have a loss of 14.6 percent in a recession, a return of 13.3 percent in a normal economy, and a return of 28 percent in a boom. There is 23 percent probability of a recession, 26 percent probability of normal economy, and 51 percent probability of boom. What is the standard deviation of the stock's returns?
- Blue Bell stock is expected to return 8.4 percent in a boom, 8.9 percent in a normal economy, and 9.2 percent in a recession. The probabilities of a boom, normal economy, and a recession are 6 percent, 92 percent, and 2 percent respectively. What is the standard deviation of the returns on this stock? Can the calculator an excel solution be provided?What is the standard deviation of the returns on a $60,000 portfolio which consists of stocks S and T? Investment in stock S is valued at $24,000. State of Economy Probability of State of Economy Return if State Occurs Stock S Stock T Boom 5% 11% 5% Normal 85% 8% 6% Recession 10% -5% 8%a) The stock market of country A has an expected return of 5 percent, and standard deviation of expected return of 8 percent. The stock market of country B has an expected return of 15 percent and standard deviation of expected return of 10 percent. Find the expected return of a portfolio with half invested in A and half invested in B. (b) The stock market of country A has an expected return of 8 percent, and standard deviation of expected return of 5 percent. The stock market of country B has an expected return of 16 percent and standard deviation of expected return of 10 percent. Assume that the correlation of expected return between A and B is negative 1. Calculate the standard deviation of expected return of a portfolio with half invested in A and half invested in B.
- A stock is expected to return 13 percent in an economic boom, 10 percent in a normal economy, and 3 percent in a recessionary economy. All else equal, which one of the following will lower the overall expected rate of return on this stock? A decrease in the probability of a recession occurring An increase in the rate of return in a recessionary economy A decrease in the probability of an economic boomThere is 11 percent probability of recession, 14 percent probability of a poor economy, 44 percent probability of a normal economy, and 31 percent probability of a boom. A stock has returns of −19.3 percent, 2.9 percent, 10.7 percent and 26.4 percent in these states of the economy, respectively. What is the stock's expected return? Multiple Choice 10.24% 13.30% 15.42% 5.18% 11.18%A stock is expected to return 13 percent in an economic boom, 10 percent in a normal economy, and 3 percent in a recessionary economy. Which one of the following will lower the overall expected rate of return on this stock? A. An increase in the rate of return for a normal economy B. A decrease in the probability of a recession occurring C. A decrease in the probability of an economic boom D. No overall change in the rate of return in a recessionary economy