![Bundle: Fundamentals of Financial Management, 14th + MindTap Finance, 1 term (6 months) Printed Access Card](https://www.bartleby.com/isbn_cover_images/9781305777118/9781305777118_largeCoverImage.gif)
To determine: The stocks expected return, standard deviation, and coefficient of variation.
Portfolio: It refers to a group of financial assets like bonds, stocks, and equivalents of cash. The portfolio is held by investors and financial users. A portfolio is constructed in accordance with the risk tolerance and the objectives of the company.
Expected Return on Stock: The expected return on stock refers to the weighted average of expected
Standard Deviation: The standard deviation refers to the stand-alone risk associated with the securities. It measures how much a data is dispersed with its standard value. Sigma represents the standard deviation.
Coefficient variation: The coefficient of variation is a tool to determine the risk. It determines the risk per unit of return. It is used for measurement, when the expected returns are same for two data.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 8 Solutions
Bundle: Fundamentals of Financial Management, 14th + MindTap Finance, 1 term (6 months) Printed Access Card
- Expected Return: Discrete Distribution A stock's return has the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return if This Demand Occurs (%) Weak 0.1 -25% Below average 0.2 -8 Average 0.4 7 Above average 0.2 35 Strong 0.1 60 1.0 Calculate the stock's expected return. Round your answer to two decimal places.___% Calculate the standard deviation. Round your answer to two decimal places.___%arrow_forwardEXPECTED RETURN A stock’s returns have the following distribution: Demand For the Company’sProducts Probability of this D-emandOccurring Rate of Return if thisDemand Occurs Weak 0.1 (3%) Below average 0.1 (14) Average 0.3 11 Above average 0.3 20 Strong 0.2 45 1.0 Assume the risk-free rate is 2%. Calculate the stock’s expected return, standard deviation , coefficient of variation, and Sharpe ratio.arrow_forwardExpected Return: Discrete Distribution A stock's return has the following distribution: Demand for theCompany's Products Probability of ThisDemand Occurring Rate of Return if ThisDemand Occurs (%) Weak 0.1 -20% Below average 0.2 -8 Average 0.4 6 Above average 0.2 30 Strong 0.1 65 1.0 Calculate the stock's expected return. Round your answer to two decimal places. % Calculate the standard deviation. Round your answer to two decimal places. %arrow_forward
- A stock's returns have the following distribution: Demand for the Company's Products Probability of this Demand Occurring Rate of Return if this Demand Occurs Weak 0.1 (48%) Below average 0.1 (15) Average 0.3 14 Above average 0.3 28 Strong 0.2 62 1.0 Assume the risk - free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio:arrow_forwardA stock's returns have the following distribution: Demand for theCompany's Products Probability of thisDemand Occurring Rate of Return ifthis Demand Occurs Weak 0.1 (22%) Below average 0.2 (13) Average 0.3 17 Above average 0.3 39 Strong 0.1 64 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio:arrow_forwardA stock's returns have the following distribution: Standard deviation: Coefficient of variation: Sharpe ratio: % Demand for the Company's Products Weak Below average % Average Above average Strong Probability of this Demand Occurring Assume the risk-free rate is 3%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: 0.1 0.1 0.4 0.3 0.1 1.0 Rate of Return if this Demand Occurs (38%) (11) 15 23 56arrow_forward
- A stock's returns have the following distribution. Demand for the Company's Products Probability of this Demand Occurring Rate of Return if this Demand Ocours Weak 0.1 (30%) Below average 0.1 (12) Average 0.3 13 Above average 0.322 Strong 0.2 53 1.0 Assume the risk-free rate is 3%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected retum. % Standard deviation: Coefficient of variation: Sharpe ratio:arrow_forwardA stock's return has the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return if This Demand Occurs (%) Weak 0.1 - 25% Below average 0.2 -9 Average 0.4 10 Above average 0.2 40 Strong 0.1 70 1.0 Calculate the stock's expected return and standard deviation. Do not round intermediate calculations. Round your answers to two decimal places. Expected return: % Standard deviation: %arrow_forwardA stock's returns have the following distribution: % Demand for the Company's Products Weak Below average Average Above average Strong % Probability of this Demand Occurring 0.1 0.1 0.3 0.3 Rate of Return if this Demand Occurs 0.2 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: Standard deviation: Coefficient of variation: Sharpe ratio: (20%) (14) 10 36 52arrow_forward
- A stock's returns have the following distribution: Demand for the Probability of this Rate of Return if Company's Products Demand Occurring this Demand Occurs Weak 0.1 (24%) Below average 0.1 (15) Average 0.4 12 Above average 0.3 28 Strong 0.1 58 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio:arrow_forwardA stock's returns have the following distribution: Sharpe ratio: 0.1 0.2 0.3 0.3 0.1 1.0 Assume the risk-free rate is 3%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: Standard deviation: Coefficient of variation: % Demand for the Company's Products Weak Below average Average Above average Strong % Probability of this Demand Occurring Rate of Return if this Demand Occurs (40%) (14) 12 25 55arrow_forwardExpected Return: Discrete Distribution A stock's return has the following distribution: Demand for theCompany's Products Probability of ThisDemand Occurring Rate of Return if ThisDemand Occurs (%) Weak 0.1 -45 % Below average 0.2 -8 Average 0.4 16 Above average 0.2 35 Strong 0.1 60 1.0 Calculate the stock’s expected return and standard deviation. Do not round intermediate calculations. Round your answers to two decimal places. Expected return: % Standard deviation: %arrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134897264/9780134897264_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)