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equations please Q1) There is a 31.80% probability of a below average economy and a 68.20% probability of an average economy. If there is a
equations please
Q1) There is a 31.80% probability of a below average economy and a 68.20% probability of an average economy. If there is a below average economy stocks A and B will have returns of -0.70% and 16.50%, respectively. If there is an average economy stocks A and B will have returns of 15.80% and -4.40%, respectively. Compute the: a) Expected Return for Stock A (0.75 points): b) Expected Return for Stock B (0.75 points): c) Standard Deviation for Stock A (0.75 points) d) Standard Deviation for Stock B (0.75 points) INSTRUCTIONS Q2) There is a 29.60% probability of an average economy and a 70.40% probability of an above average economy. You invest 21.70% of your money in Stock Sand 78.30% of your money in Stock T. In an average economy the expected returns for Stock Sand Stock T are 11.70% and 8.80%, respectively. In an above average economy the the expected returns for Stock S and T are 30.30% and 31.50%, respectively. What is the expected return for this two stock portfolio? (2 points) Q3) You are invested 29.60% in growth stocks with a beta of 1.85, 24.40% in value stocks with a beta of 1.23, and 46.00% in the market portfolio. What is the beta of your portfolio? (1 point) For the final answers, round your answer to the nearest 4 decimal places (3 decimals for the reward-to-risk ratio and 2 for the beta-coefficient). If you need to use a calculated number for further calculations, DO NOT round until after all calculations have been completed Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 1.48; expected return on the Market = 10.80%, expected return on T-bills 0%; current stock Price $8.19; expected stock price in one year = $8.01; expected dividend payment next year = $2.19. Calculate the a) Required return for this stock (1 point): b) Expected return for this stock (1 point): Q5) The market risk premium for next period is 9.80% and the risk-free rate is 3.60%. Stock Z has a beta of 0.77 and an expected return of 12.50%. What is the: a) Market's reward-to-risk ratio? (1 point): b) Stock 7's reward-to-risk ratio (1 point)Step by Step Solution
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