Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following information: Rate of Return if State Occurs Probability of State of Economy Stock A Stock B State of Economy Recession Normal Boom

image text in transcribed
image text in transcribed
image text in transcribed
Consider the following information: Rate of Return if State Occurs Probability of State of Economy Stock A Stock B State of Economy Recession Normal Boom .21 .06 -21 58 09 08 21 14 25 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.. 32.16.) b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.. 32.16.) % a. Stock A expected return % a. Stock B expected return % b. Stock A standard deviation b. Stock B standard deviation % Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C .58 Boom Bust .08 17 37 42 14 .06 -.04 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) % a. Expected return b. Variance Suppose a stock had an initial price of $60 per share, paid a dividend of $2.20 per share during the year, and had an ending share price of $49. Compute the percentage total return, dividend yield, and capital gains yleld. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Total return 26.93 % Dividend yield % 3.66 18.33% Capital gains yield

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

Principles Of Sustainable Finance

Authors: Dirk Schoenmaker, Willem Schramade

1st Edition

0198826605, 978-0198826606

More Books

Students also viewed these Finance questions