EXPECTED 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.
EXPECTED 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.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...
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EXPECTED RETURN A stock’s returns have the following distribution:
Demand For the Company’s Products |
Probability of this D-emand Occurring |
Demand 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.
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