Based on the following information, calculate the expected return and standard deviation for the two stocks. RATE

Question:

Based on the following information, calculate the expected return and standard deviation for the two stocks.

RATE OF RETURN IF STATE OCCURS PROBABILITY OF STATE OF ECONOMY STATE OF ECONOMY STOCK A STOCK B Recession .15 .01 - 19 Normal 50 .09 .11 Boom 35 .13 .37

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Corporate Finance Core Principles and Applications

ISBN: 978-1259289903

5th edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

See More Books

Question Posted: Sep 14, 2020 01:22 AM

See More Questions

Calculate the expected return and standard deviation for an investment with the following probability distribution. Return (%) Probability (%) -10 20 5 20 10 20 17 30 26 10 Expected return Standard...
Calculate the expected return, variance, and standard deviation for the stocks in the table below. Product Demand Probability 20% 60% 20% Stock #1 30% 12% -10% Stock #2 2000 1490 -5% Stock #3 15% 10%...
The table below shows the expected return and standard deviation for two stocks. Is the pattern shown in the table possible? Stock Beta Std. Dev 1 1.5 22% 2 0.9 3590
A thermocouple Type K is calibrated in lab condition at 50% relative humidity (RH) prior to outdoor operation. After 12-month in outdoor installation, the thermocouple is again tested at 75% RH. Both...
As in Section 6.3, Exercise 5, the sample space is S = {0, 1, 2, 3, 4}, Pr({0}) = 0.2, Pr({1}) = 0.3, Pr({2}) = 0.4, Pr({3}) = 0.1, Pr({4}) = 0.0, A = {0, 1, 2}, and B = {0, 2, 4}. In the above...
Staff turnover is generally low during recessions, but it increases substantially in firms which get into financial difficulty. What factors account for this phenom enon? LO9
Dyson successfully sells its fans and heaters for $150 to $400, whereas most conventional fans sell for around $25. Explain the value it creates and how this affects the price it can charge.
Here are some historical data on the risk characteristics of Dell and Microsoft: Assume the standard deviation of the return on the market was 15 percent. a. The correlation coefficient of Dell?s...
Fri Oct 9 Take Quiz Question 3 Company is paid $5,000 for work to be done next year Debit Revenue $5,000 and Credit Cash $5,000 Debit Cash for $5,000 and Credit Unearned Revenue $5,000 Debit Cash for...
1. What business research problem does Royal Barton face? What are his information needs? Outline some survey research objectives for a research project on the Royal Bee system. 2. What type of...
A stock has had returns of 16.43 percent, 15.81 percent, 26.34 percent, 5.98 percent, and 18.43 percent over the past five years, respectively. What was the holding period return for the stock?
You want to calculate the WACC for auto parts retailer AutoZone (AZO). Complete the following steps to construct a spreadsheet that can be updated. a. Using an input for the ticker symbol, create...
The total energy consumed in the United States in 1 y is about 7.0 10 19 J. How many kilograms of 235 U would be needed to provide this amount of energy if we assume that 200 MeV of energy is...
Which industries gain and which industries lose from the availability of cheap natural gas produced from shale deposits? Joseph Schumpeter, an Austrian-born economist who emigrated to the United...
Did the value of the Canadian dollar rise or fall between Tuesday and Wednesday?
As vice president for community relations, you want to explore the possibility of developing service learning programs with several nearby colleges and universities. Using Figure 2.5, suggest the...
Your organization initiated a project to raise money for an important charity. Assume that there are 1,000 people in your organization. Also, assume that you have six months to raise as much money as...
A $20-\mathrm{cm}$-long rod, with uniform linear charge density $100 \mathrm{nC} / \mathrm{cm}$, is set up symmetrically on the $x$ axis. What are the magnitude and direction of the electric...
Which of following is the JavaScript escape character? a. " b. ' c. \ d. /
The age-old saying for investing is "buy low and sell high," but this is easier said than done. Investors who panic about falling prices sell their investments, which in turn lowers the price and...
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $8.95 million and will be sold for $1.96 million at the end of the...
Howell Petroleum is considering a new project that complements its existing business. The machine required for the project costs $3.57 million. The marketing department predicts that sales related to...
You are evaluating two different silicon wafer milling machines. The Techron I costs $490,000, has a three-year life, and has pretax operating costs of $90,000 per year. The Techron II costs...
Assignment Title: The Role of Bookkeeping in Business Management and Financial Reporting Objective: Understand the importance of proper bookkeeping procedures in the management of...
17) The adjustment that is made to allocate the cost of a building over its expected life is called:A) depreciation expense.B) residual value.C) accumulated depreciation.D) None of the above answers...
9) Prepaid Rent is considered to be a(n):A) liability.B) asset.C) contra-asset.D) expense.10) As Prepaid Rent is used, it becomes a(n):A) liability.B) expense. C) contra-asset.D) contra-revenue.11)...

Based on the following information, calculate the expected return and standard deviation for the two stocks. RATE

Question:

RATE OF RETURN IF STATE OCCURS PROBABILITY OF STATE OF ECONOMY STATE OF ECONOMY STOCK A STOCK B Recession .15 .01 - 19 Normal 50 .09 .11 Boom 35 .13 .37

Step by Step Answer:

Well first calculate the Expected Values for the two Stocks A and B Expected value formula To cal...View the full answer

Corporate Finance Core Principles and Applications

Students also viewed these Business questions