Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Average realized return on BLM's stock was 19.05% Based on economic conditions, you've compiled the following estimates of returns from BLM's stock and the

The Average realized return on BLM's stock was 19.05%

image text in transcribed

Based on economic conditions, you've compiled the following estimates of returns from BLM's stock and the probabilities associated with the economic condition for the next year: Market Condition Probability BLM's rj Boom 0.50 38% Normal 0.25 23% Recession 0.25 -30% The standard deviation of returns for Blue Llama Mining's stock is (Note: Do not round intermediate calculation.) If investors expect the average realized return from 2012 to 2016 on BLM's stock to continue into the future, its coefficient of variation (v) will be Suppose you need to invest $10,000 in Blue Llama Mining Inc. or another company called Robonomics Corp. You know that Robonomics Corp. has a coefficient of variation of 2.94, and you have calculated the coefficient of variation for BLM. To make your investment decision, you spend some time analyzing the situation. Based on your analysis, which of the following statements is true? Robonomics Corp. is two times more risky than Blue Llama Mining (BLM) Inc. Blue Llama Mining (BLM) Inc. is two times more risky than Robonomics Corp

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

International Trade Finance

Authors: Indian Institute Of Banking & Finance

1st Edition

9386394723, 978-9386394729

More Books

Students also viewed these Finance questions

Question

Excel caculation on cascade mental health clinic

Answered: 1 week ago