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Which of the following statements regarding standard deviation is TRUE:
Group of answer choices
A measure of the dispersion of a random variable
The annualised volatility
The square root of volatility
Always expressed in %
Step by step
Solved in 2 steps
- The standard deviation measures the _____ of a security's returns over time. Multiple Choice average value frequency volatility mean arithmetic average(a) A stock’s returns have the following distribution: Calculate the stock’s expected return, standard deviation, and the coefficient of variation.How are the following used on a stand-alone and a portfolio basis? 1. Standard Deviation 2. Variance 3. Covariance
- Which one of the following statements is TRUE? O a. If the distribution of returns for an asset has a variance of zero, then covariance of returns between that asset and the returns any other asset must equal zero. O b. The covariance allows us to gauge the strength of the relationship between stocks. O c. While the variance and the standard deviation both measure the variability of the returns, the variance is easier to interpret because it is in the same units as the returns themselves. O d. If two assets with return correlation coefficients less than one make up a portfolio, then the portfolio does not take advantage of any diversification benefits.(c) Consider information given in the table below and answers the question asked thereafter: i. Calculate expected return on each stock? On the basis of this measure, which stock you will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of this measure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of this measure, which stock you will choose?iv. Calculate covariance and coefficient of correlation between the returns of the stocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfolio comprising of $35,000 invested in stock A and remaining amount in stock B. Calculate risk and return of your portfolio. (d) Firm A reports a Profit Margin of 6.5% and a Total Asset Turnover Ratio of 3.25. Their total asset level is $8,500,000. Assume there are 700,000 shares outstanding and the PE ratio is 11. Also, assume the Return on Equity is 16%. Based on this, calculate…What are the (a) expected return, (b) standard deviation, and (c) coefficient of variation for an investment with the following probability distribution? Probability Payoff 0.2 19.0% 0.7 9.0 0.1 4.0
- If a stock's variance of return is written as σ2, then its standard deviation will be written as:What is the correlation between returns of stock S and T, given that covariance between stocks is 2.419 and standard deviation are 1.23 and 2.21, respectively.Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r, is 18.7%; and that the coefficient of variation, CV, is 1.88, answer the following questions: a. Find the standard deviation of returns, sigma Subscript rσr. b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence: (1) 68%, (2) 95%, (3) 99%.
- Illustrate the calculation of the standard deviation of returns?the variance of stock A is .004, the variance of the market .007 and the covariance between the two is .0026. what is the correlation coefficient?how do you calculate a stocks average monthly return,its return variance ,standard deviation and beta? what is the formula
