Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. Measuring standalone risk using realized data Returns camned over a given time period are called realized returns. Historical data on realized returns is often

image text in transcribed

4. Measuring standalone risk using realized data Returns camned 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. Five years of realized returns for Falcon Freight Inc. (Falcon) are given in the following table: 2012 2013 2014 2016 2015 31.50% Stock return 18.75% 12.75% 22.50% 9.75% Also note that: 1. While Falcon was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on Falcon's equity are calculated as arithmetic returns Given this return data, the average realized return on Falcon Freight Inc.'s stock is of Falcon's historical returns. Based on this conclusion, the standard deviation of Falcon's The preceding data series represents historical returns is If investors expect the average realized return on Falcon Freight Inc.'s stock from 2012 to 2016 to continue into the future, its expected coefficient of variation (CV) is expected to equal

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_2

Step: 3

blur-text-image_3

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

Theoretical Foundations For Quantitative Finance

Authors: Luca Spadafora, Gennady P Berman

1st Edition

9813202475, 978-9813202474

More Books

Students also viewed these Finance questions

Question

What are the purposes of promotion ?

Answered: 1 week ago

Question

Methods of Delivery Guidelines for

Answered: 1 week ago