Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. Measuring stand-alone risk using realized (historical) data Returns earned over a given time period are called realized returns. Historical data on realized returns is

image text in transcribed
image text in transcribed
3. Measuring stand-alone risk using realized (historical) data Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Falcon Freight Inc. (FF): Five years of realized returns for FF are given in the following table. Remember: 1. While FF was started 40 years ago, its common stock has been publicly traded for the past 25 years: 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for FF for 2014 to 2018 are: 2015 2016 2017 2018 2014 3.75% Stock return 2.55% 4.50% 6.30% 1.95% Given the preceding data, the average realized return on FF's stock is The preceding data series represents of FF's historical returns. Based on this conclusion, the standard deviation of FF's historical Zoomus recording Toom Ch 08: Assignment - Risk and Rates of Return 3. Measuring stand-alone risk using realized (historical) data Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Falcon Freight Inc. (FF): Five years of realized returns for FF are given in the following table. Remember: 1. While FF was started 40 years ago, its common stock has been pubiley traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns 3. The historical returns for FF for 2014 to 2018 are: quiz!] Stock return 2014 3.75% 2015 2.55% 2016 2017 4.50% 6,30% 2018 1.95% Given the preceding data, the average realized return on FP's stocks The preceding data series represents of historical returns. Based on this condusion, the standard deviation of F's historic returns It investors expect the average rated return from 2014 to 2018 FF's stock to continue into the future, its coicent of variation (GV) will be

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions