Basic Business Statistics Student Value Edition Plus NEW MyLab Statistics with Pearson eText -- Access Card Package (13th Edition)
13th Edition
ISBN: 9780133873641
Author: Mark L. Berenson, David M. Levine, Kathryn A. Szabat
Publisher: PEARSON
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Chapter 5, Problem 9PS
a.
To determine
Find the portfolio expected return.
b.
To determine
Find the portfolio risk.
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Consider the three stocks in the following table. P+ represents price at time t, and 0 represents shares outstanding at time t. Stock C
splits two-for-one in the last period.
B
C
Pe
98
58
116
Divisor
%0
100
200
200 126
P1
103
53
Rate of return
Required:
a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t=0 to t= 1). (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
Rate of return
%
01
100
200
200
P₂
103.
53
63
b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2
decimal places.)
92
100
200
400
%
c. Calculate the rate of return of the price-weighted index for the second period (t-1 to t=2).
O If p(A) = 0.17, p(B) = 0.06 and p(A and B) = 0.0102, are A and B independent?
%3D
Given the monthly returns that follow, find the R², alpha, and beta of the portfolio. Compute the average return differential with and without sign. Do not
round intermediate calculations. Round your answers to two decimal places.
R²:
Alpha:
Beta:
%
Average return difference (with signs):
Average return difference (without signs)
Month
January
February
March
April
May
June
July
August
September
October
November
December
%
%
Portfolio Return
5.6%
-2.5
-1.7
2.3
0.4
-0.6
0.2
1.1
-0.3
-3.1
2.8
0.8
S&P 500 Return
5.8%
Grade it Now
-3.3
-1.3
1.5
-0.4
0.0
0.9
1.3
0.0
-3.8
2.4
0.3
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Chapter 5 Solutions
Basic Business Statistics Student Value Edition Plus NEW MyLab Statistics with Pearson eText -- Access Card Package (13th Edition)
Ch. 5 - Given the following probability distribution: a....Ch. 5 - Prob. 2PSCh. 5 - Recently , a regional automobile dealership sent...Ch. 5 - In the carnival game Under-or -Over-Seven, a pair...Ch. 5 - Prob. 5PSCh. 5 - Prob. 6PSCh. 5 - Prob. 7PSCh. 5 - Given the following probability distribution for...Ch. 5 - Prob. 9PSCh. 5 - The process of being served at a bank consists of...
Ch. 5 - In the portfolio example in this section (see page...Ch. 5 - Prob. 12PSCh. 5 - Prob. 13PSCh. 5 - Prob. 14PSCh. 5 - Suppose that in Example 5.1 on page 193, you...Ch. 5 - Prob. 16PSCh. 5 - Suppose that in Problem 5.16 you wanted to create...Ch. 5 - Determine the following:...Ch. 5 - Prob. 19PSCh. 5 - Determine the mean and standard deviation of the...Ch. 5 - The increase or decrease in the price of a stock...Ch. 5 - Prob. 22PSCh. 5 - Prob. 23PSCh. 5 - A manufacturing company regularly conducts quality...Ch. 5 - When a customer places an order with Rudy’s...Ch. 5 - Prob. 26PSCh. 5 - In Example 5.5 on page 200, you and two friends...Ch. 5 - Assume a Poisson distribution....Ch. 5 - Assume a Poisson distribution....Ch. 5 - Assume a Poisson distribution with =5.0. What is...Ch. 5 - Prob. 31PSCh. 5 - The quality control manager of Marilyn’s Cookies...Ch. 5 - Refer to Problem 5.22. How many cookies in a batch...Ch. 5 - Prob. 34PSCh. 5 - Prob. 35PSCh. 5 - The Consumer Financial Protection Bureau’s...Ch. 5 - J.D. Power and Associates calculates and publishes...Ch. 5 - Prob. 38PSCh. 5 - Prob. 39PSCh. 5 - Refer to Problem 5.27. if you purchased a Toyota...Ch. 5 - A toll-free phone number is available from 9 A.M....Ch. 5 - Prob. 42PSCh. 5 - Prob. 43PSCh. 5 - An auditor for the Internal Revenue Service is...Ch. 5 - Prob. 45PSCh. 5 - Prob. 46PSCh. 5 - Prob. 47PSCh. 5 - Prob. 48PSCh. 5 - Prob. 49PSCh. 5 - What are the four properties that must be present...Ch. 5 - Prob. 51PSCh. 5 - Prob. 52PSCh. 5 - Darwin Head, a 35-year-old sawmill worker, won 1...Ch. 5 - Between 1896-when the Dow Jones index was...Ch. 5 - Smartphone adoption among American teens has...Ch. 5 - One theory concerning the Dow jones industrial...Ch. 5 - Prob. 57PSCh. 5 - Prob. 58PSCh. 5 - Social log-ins involve recommending of sharing an...Ch. 5 - The Consumer Financial Protection Bureau’s...Ch. 5 - Prob. 61PSCh. 5 - One theory concerning the...Ch. 5 - Spurious correlation refers to the apparent...Ch. 5 - Prob. 64PSCh. 5 - Prob. 65PS
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- Jerome invests $18,000 at age 17. He hopes the investments will be worth $30,000 when he turns 26. If the interest compounds continuously, approximately what rate of growth will he need to achieve his goal? Is that a reasonable expectation?arrow_forwardSuppose an investment account is opened with aninitial deposit of 10,500 earning 6.25 interest,compounded continuously. How much will theaccount be warm after 25 years?arrow_forwardThe table to the right classifies a stock's price change as up, down, or no change for both today's and yesterday's prices Price changes were examined for 104 days. A financial theory states that the price change of today for a stock must be independent of yesterday's price change. Test the hypothesis that daily stock price changes for this stock are independent. Let a=0.10. Price Change Previous Day Up No Change Down 16 Price Change Today 13 Up No Change 7 Down 14 16 10 13 Determine the null and alternative hypotheses for the test. Choose the correct answer below. O A. Ho: Today's price change and yesterday's price change are not independent. HA: Today's price change and yesterday's price change are independent. O B. Ho: Today's price change and yesterday's price change are independent. HA: Today's price change and yesterday's price change are not independent. OC. Ho: Today's price change and yesterday's price change have non-equal proportions. HA: Today's price change and yesterday's…arrow_forward
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