PRIN.OF CORPORATE FINANCE >BI<
PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
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Chapter 13, Problem 13PS
Summary Introduction

To discuss: The manner in which these estimates used to compute an abnormal return.

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You’ve observed the following returns on SkyNet Data Corporation’s stock over the past five years: 11 percent, –10 percent, 19 percent, 18 percent, and 10 percent.   a. What was the arithmetic average return on the company's stock over this five-year period? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) b-1. What was the variance of the company's returns over this period? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) b-2. What was the standard deviation of the company’s returns over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
The monthly sales for Yazici Batteries, Inc., were asfollows:   a) Plot the monthly sales data.b) Forecast January sales using each of the following:i) Naive method.ii) A 3-month moving average.iii) A 6-month weighted average using .1, .1, .1, .2, .2, and .3,with the heaviest weights applied to the most recent months.iv) Exponential smoothing using an a = .3 and a Septemberforecast of 18.v) A trend projection. c) With the data given, which method would allow you to fore-cast next March’s sales?
You’ve observed the following returns on Pine Computer’s stock over the past five years: 13 percent, −13 percent, 20 percent, 25 percent, and 10 percent.   a. What was the arithmetic average return on the company’s stock over this five-year period? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) b-1. What was the variance of the company’s returns over this period? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) b-2. What was the standard deviation of the company’s returns over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)                  a. Average return   % b-1. Variance     b-2. Standard deviation   %
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Portfolio return, variance, standard deviation; Author: MyFinanceTeacher;https://www.youtube.com/watch?v=RWT0kx36vZE;License: Standard YouTube License, CC-BY