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CFIN -STUDENT EDITION-W/ACCESS >CUSTOM<
6th Edition
ISBN: 9780357753118
Author: BESLEY
Publisher: CENGAGE C
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Chapter 12, Problem 6PROB
Summary Introduction
Expected EPS:
Estimated income to be earned from a company to its equity shareholders. EPS stands for earnings per share.
Calculate the expected EPS as follows:
Standard deviation is used to measure the risk of the investment.
Calculate the standard deviation as follows:
Coefficient of variation:
It is ratio of standard deviation to expected return.
Calculate the coefficient of variation as follows:
EPS for two firms is given. Calculate the expected value, standard deviation and coefficient of variation for the both the firms
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Students have asked these similar questions
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
Compute the (a) expected return, (b) standard deviation, and (c) coefficient of variation for investments with the following probability distributions:
Probability r/A r/B
0.3 30.0% 5.0%
0.2 10.0 15.0
0.5 -2.0 25.0
Calculate the (a) expected return, (b) standard deviation, and (c) coefficient of variation for an investment with the following probability distribution:
Probability Payoff
0.45 32.0%
0.35 -4.0%
0.20 -20.0%
Chapter 12 Solutions
CFIN -STUDENT EDITION-W/ACCESS >CUSTOM<
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- calculate the following Sharpe Ratio (SP) Treynor Measure Jensen Measure M2 measure T2 measure Information Ratio (appraisal ratio) Fund Average return Standard Deviation Beta coefficient Unsystematic Risk A 0.240 0.220 0.800 0.017 B 0.200 0.170 0.900 0.450 C 0.290 0.380 1.200 0.074 D 0.260 0.290 1.100 0.026 E 0.180 0.400 0.900 0.121 F 0.320 0.460 1.100 0.153 G 0.250 0.190 0.700 0.120 Market 0.220 0.180 1.000 0.000 Risk free return 0.050 0.000arrow_forwardGiven the following probability distribution of returns: Probability Return 0.1 -15.0% 0.25 0.0% 0.3 8.5% 0.25 12.0% 0.1 32.0% what is the expected return?arrow_forwardCompute the expected rate of return on investment i given the followinginformation: Rf = 8%; E(RM) = 14%; βi = 1.0.b. Recalculate the required rate of return assuming βi is 1.8.arrow_forward
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