Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 2 This question has 3 parts. Each part is independent. a. Using the following returns, calculate the arithmetic average returns, the variances, and the

image text in transcribed
QUESTION 2 This question has 3 parts. Each part is independent. a. Using the following returns, calculate the arithmetic average returns, the variances, and the standard deviations for the stock Alpha. (2 marks) Year Returns Stock Alpha 12 % 1 2 23 %6 3 10 % 4 - 13 %6 5 11 % b. Suppose you buy a stock for $225 one year ago. Today it sells for $275, and it also pays you dividend $25 per year. What is the risk premium? Assume that the treasury bill rate 4.8%. (2 marks) c. Suppose your cousin invests in the stock market and doubles her money in a single year while the market, on average, earned a return of only about 15%. Is your cousin's performance a violation of market efficiency (2 marks)

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

Finance A Quantitative Introduction Volume 1

Authors: Piotr Staszkiewicz, Lucia Staszkiewicz

1st Edition

0128015845, 978-0128015841

More Books

Students also viewed these Finance questions

Question

explain a three-step approach to implementing small-scale change?

Answered: 1 week ago

Question

1. Arouse curiosity with questions such as What would happen if?

Answered: 1 week ago

Question

=+10. Did you clearly project the brand's USP?

Answered: 1 week ago