EBK CORPORATE FINANCE
11th Edition
ISBN: 8220102798878
Author: Ross
Publisher: YUZU
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Chapter 11, Problem 6QP
Calculating Returns and Standard Deviations Based on the following information, calculate the expected return and standard deviation:
| State of Economy | Probability of State of Economy | |
| Depression | .15 | –105 |
| Recession | .30 | .059 |
| Normal | .45 | .130 |
| Boom | . 0 | .211 |
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Based on the following information, what is the standard deviation of returns?
State of Economy
Probability of Stateof Economy
Rate of Return ifState Occurs
Recession
.28
−
.096
Normal
.41
.111
Boom
.31
.221
Based on the following information, what is the standard deviation of returns?
State of Economy
Probability of State of Economy
Rate of Return if State Occurs
Recession
.22
−.090
Normal
.47
.105
Boom
.31
.215
Based on the following information, what is the standard deviation of returns?
Probability of State
of Economy
Rate of Return if
State of Economy
State Occurs
Recession
.24
-.092
Normal
.45
.107
Boom
.31
.217
Chapter 11 Solutions
EBK CORPORATE FINANCE
Ch. 11 - Diversifiable and Nondiversifiable Risks In broad...Ch. 11 - Systematic versus Unsystematic Risk Classify the...Ch. 11 - Expected Portfolio Returns If a portfolio has a...Ch. 11 - Diversification True or false: The most important...Ch. 11 - Portfolio Risk If a portfolio has a positive...Ch. 11 - Beta and CAPM Is it possible that a risky asset...Ch. 11 - Covariance Briefly explain why the covariance of a...Ch. 11 - Prob. 8CQCh. 11 - Prob. 9CQCh. 11 - Prob. 10CQ
Ch. 11 - Determining Portfolio Weights What are the...Ch. 11 - Portfolio Expected Return You own a portfolio that...Ch. 11 - Portfolio Expected Return You own a portfolio that...Ch. 11 - Portfolio Expected Return You have 10,000 to...Ch. 11 - Prob. 5QPCh. 11 - Calculating Returns and Standard Deviations Based...Ch. 11 - Calculating Expected Returns A portfolio is...Ch. 11 - Returns and Standard Deviations Consider the...Ch. 11 - Returns and Standard Deviations Consider the...Ch. 11 - Calculating Portfolio Betas You own a stock...Ch. 11 - Calculating Portfolio Betas You own a portfolio...Ch. 11 - Using CAPM A stock has a beta of 1.15, the...Ch. 11 - Using CAPM A stock has an expected return of 13.4...Ch. 11 - Using CAPM A stock has an expected return of 13.4...Ch. 11 - Using CAPM A stock has an expected return of 11.2...Ch. 11 - Prob. 16QPCh. 11 - Prob. 17QPCh. 11 - Reward-to-Risk Ratios Stock Y has a beta of 1.20...Ch. 11 - Prob. 19QPCh. 11 - Portfolio Returns Using information from the...Ch. 11 - Prob. 21QPCh. 11 - Portfolio Returns and Deviations Consider the...Ch. 11 - Analyzing a Portfolio You want to create a...Ch. 11 - Prob. 24QPCh. 11 - Prob. 25QPCh. 11 - Prob. 26QPCh. 11 - Prob. 27QPCh. 11 - Prob. 28QPCh. 11 - Correlation and Beta You have been provided the...Ch. 11 - CML The market portfolio has an expected return of...Ch. 11 - Beta and CAPM A portfolio that combines the...Ch. 11 - Beta and CAPM Suppose the risk-free rate is 4.7...Ch. 11 - Systematic versus Unsystematic Risk Consider the...Ch. 11 - SML Suppose you observe the following situation:...Ch. 11 - Prob. 35QPCh. 11 - Prob. 36QPCh. 11 - Prob. 37QPCh. 11 - Minimum Variance Portfolio Assume Stocks A and 8...Ch. 11 - Prob. 1MCCh. 11 - Prob. 2MC
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- 11.6 Calculating Returns and Standard Deviations Based on the following information, calculate the expected return and standard deviation: State of Economy Probability of SE Rate of Return If State Occurs Depression .15 -.148 Recession .30 .031 Normal .45 .162 Boom .10 .348arrow_forwardConsider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .21 −.04 Normal .65 .16 Boom .14 .22 Calculate the expected return. Multiple Choice 13.15% 2.27% 12.64% 13.27% 12.01%arrow_forwardConsider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Recession 0.11 -0.06 Normal 0.45 0.15 Boom 0.44 0.32 Calculate the expected return.arrow_forward
- Consider the following information: State ofEconomy Probability of Stateof Economy Rate of Returnif State Occurs Recession .21 –.13 Normal .49 .15 Boom .30 .34 Calculate the expected return.arrow_forwardBased on the following information, what is the standard deviation of returns? Rate of Return if State Occurs State of Economy Probability of State of Economy Recession.23 Normal 26 Boom 51 O 19.63 % O 25.45% O 19.09% O 13.82% O 27.76 % -.111 126 236arrow_forwardYou are given the following information: State of Economy Probability ofState of Economy Rate of ReturnIf State Occurs Depression .07 −.097 Recession .17 .067 Normal .42 .138 Boom .34 .219 Calculate the expected return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return % Calculate the standard deviation. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation %arrow_forward
- Considering the following information gathered: State of Economy Probability of State of Economy Rate of Return if State Occurs Recession 0.11 -0.03 Normal 0.45 0.16 Boom 0.44 0.29 Please Calculate the expected return. Multiple Choice 18.65% 2.80% 19.63% 20.61% 20.42%arrow_forwardYou are given the following information: State of Probability of Rate of Return Economy State of Economy If State Occurs Depression Recession .13 -102 22 .062 Normal .48 .133 Boom .17 .214 a. Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Expected return b. Standard deviation % %arrow_forwardCompute the standard deviation of the expected return given these three economic states, their likelihoods, and the potential returns: Probability 0.1 Economic State Fast Growth Slow Growth Recession 0.6 0.3 Multiple Choice 6.8 percent 16.5 percent 21.5 percent 46.4 percent Return 50% 8% -10%arrow_forward
- Following are three economic states, their likelihoods, and the potential returns: Economic State Fast growth Slow growth Recession Probability 0.27 0.35 0.38 Standard deviation Return 32% 4 -22 Determine the standard deviation of the expected return. (Do not round intermediate calculations and round your answe decimal places.) %arrow_forwardFollowing are four economic states, their likelihoods, and the potential returns: Probability 0.22 Economic State Fast growth Slow growth Recession Depression 0.52 0.19 0.07 Expected return Standard deviation Compute the expected return and standard deviation. Note: Do not round intermediate calculations and round your answers to 2 decimal places. Return 76% 18 -18 -52 % %arrow_forwardFollowing are three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast growth 0.29 25% Slow growth 0.41 11 Recession 0.30 -38 Determine the standard deviation of the expected return.arrow_forward
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