Based on the following information (Interpretation word limit 200 to 250 words) Rate of return if state occurs State of Economy Probability of state of economy Stock A Stock B Stock C Recession 33 33 7 2 5 Normal 33 33 10 0 11 Boom 33 33 15 3 20 a)Which investment has the highest expected return b) Which investment has the highest total risk

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Mar 11, 2024

Based on the following information: (Interpretation word limit 200 to 250 words) Rate of return if state occurs State of Economy Probability of

Based on the following information: (Interpretation word limit 200 to 250 words)

		Rate of return if state occurs
State of Economy	Probability of state of economy	Stock A	Stock B	Stock C
Recession	33.33%	7%	-2%	5%
Normal	33.33%	10%	0%	11%
Boom	33.33%	15%	3%	20%

a) Which investment has the highest expected return?

b) Which investment has the highest total risk?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a To calculate the expected return for each investment we multiply the rate of return by ... 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

Step: 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

Corporate Finance Core Principles and Applications

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

5th edition

1259289907, 978-1259289903

More Books

Students also viewed these Finance questions

Question

CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...

Answered: 1 week ago

Question

2 Find the function f(x) = ax + bx + cx+d for which f(-3)=-115, f(-1) = -5, f(1) = 1, and f(2) = 10. f(x)=5 (Simplify your answer.)

Answered: 1 week ago

Question

1. Convert the following BNF to EBNF: expr expr+ term | term term term* power | term power power power factor power factor factor (expr) | number number number digit | digit digit 0 | 1 | 2 | 3 | 4...

Answered: 1 week ago

Question

★★★★★

Run experiments to determine the relative costs of Math.exp() and the methods from EXERCISE 1.3.38 for computing e x : the direct method with nested for loops, the improvement with a single for loop,...

Answered: 1 week ago

Question

★★★★★

a. The event {X2 ¤ y} is equivalent to what event involving X itself? b. If X has a standard normal distribution, use part (a) to write the integral that equals P(X2 ¤ y). Then...

Answered: 1 week ago

Question

★★★★★

Bumper Crop, Inc., a large fertilizer distributor based in California, is planning to use a lockbox system to speed up collections from its customers located on the East Coast. A Philadelphia-area...

Answered: 1 week ago

Question

★★★★★

Explain the experimental method as used by clinical psychologists.

Answered: 1 week ago

Question

★★★★★

Consider a bull spread where you buy a 40-strike call and sell a 45-strike call. Suppose S = $40, = 0.30, r = 0.08, = 0, and T = 0.5. Draw a graph with stock prices ranging from $20 to $60...

Answered: 1 week ago

Question

★★★★★

1 point q , allows the linking of devices running on many different platforms. A public switched telephone network A mobile telephone switching office Time Division Multiple Access Transmission...

Answered: 1 week ago

Question

★★★★★

Suppose that on January 2, 2014, the yield on AAA-rated corporate bonds were 5 percent; suppose also that one year later, the yield on these same bonds had climbed to about 6 percent because the...

Answered: 1 week ago

Question

★★★★★

5) (10 pts) a) Match the function in row 1 with its derivative in row 2: A. B. C D. 2. 3. 4. 19 A. B. C. D. b) Explain 2 ways you can answer the question in part a) by inspecting the graphs (ie....

Answered: 1 week ago

Question

★★★★★

An employer in Seattle, Washington has started a new "healthy lifestyle" initiative for employees and indpendent contractors. The desired achievement for each group is a mean score of 25 on a...

Answered: 1 week ago

Question

★★★★★

Bintang Jaya Bhd operates two (2) production departments, Machining, and Assembly and two (2) service departments, Canteen and Store. Machining department is highly dependent on the use of machines,...

Answered: 1 week ago

Question

★★★★★

Henrik is stopped behind another vehicle at an intersection. The light turns green, and he waits 3-4 seconds before accelerating. Why should he do this?It puts adequate following distance between...

Answered: 1 week ago

Question

★★★★★

You & a group of your co-workers go for after-work drinks on Fridays. Although the time together usually starts off positive and fun, it usually disintegrates into a trash talk session about your...

Answered: 1 week ago

Question

★★★★★

STORY: https://www.psychologytoday.com/us/blog/twofold/202109/twins-separated-birth-growing-continents-apart Part 1: After you have read their story, describe about how environmental and genetic...

Answered: 1 week ago

Question

★★★★★

Prepare a Schedule of Note Discount Amortization for Sheridan Company under the effective interest method. (Round answers to O decimal places eg. 5,275.) Date Cash Interest (6 % ) Effective Interest...

Answered: 1 week ago

Question

★★★★★

Southwestern Punch was made by Frutayuda, Inc. and sold in 12-ounce cans to benefit victims of Hurricane Zero. The mean number of ounces placed in a can by an automatic fill pump is 11.7 with a...

Answered: 1 week ago

Question

★★★★★

First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually. If you made a $4,800 deposit in each bank, how...

Answered: 1 week ago

Question

★★★★★

Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $25,000 per month for 20 years, with the first...

Answered: 1 week ago

Question

★★★★★

Your company currently produces and sells steel shaft golf clubs. The board of directors wants you to consider the introduction of a new line of titanium bubble woods with graphite shafts. Which of...

Answered: 1 week ago

Question

★★★★★

3.77. Refer to Table 3.2 (page 34). Explain why the mean of these 50 observations is not necessarily the same as the violent crime rate for the entire U.S. population.

Answered: 1 week ago

Question

★★★★★

3.81. The leastsquares property of the mean states that the data fall closer to y than to any other number c, in the sense that the sum of squares of deviations of the data about their mean is...

Answered: 1 week ago

Question

★★★★★

- >y-

Answered: 1 week ago

Previous Question Next Question