Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The table shows the return over a 6 month period for the market and for the stock XYZ itd. Month Market Return XYZ LTD stock

The table shows the return over a 6 month period for the market and for the stock XYZ itd.

Month

Market Return

XYZ LTD stock return

1

-0.08

-0.11

2

0.05

0.07

3

0.11

0.15

4

-0.06

-0.09

5

0.08

0.02

6

0.03

0.05

1. Using historical return, calculate the expected return and standard deviation of XYZ and the market

2. Which one is a better investment based on expected return and risk alone?

3. If the correlation between XYZ and the market is 0.935 what is the beta of the market? What is beta of XYZ ltd?

4. Risk can be measured by the standard deviation and beta, explain the differences between these two measures. Explains the differences between beta and standard deviation.

Step by Step Solution

3.49 Rating (162 Votes )

There are 3 Steps involved in it

Step: 1

1 Using the historical returns we can calculate the expected return and standard deviation of XYZ an... 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

Understanding Basic Statistics

Authors: Charles Henry Brase, Corrinne Pellillo Brase

6th Edition

978-1133525097, 1133525091, 1111827028, 978-1133110316, 1133110312, 978-1111827021

More Books

Students also viewed these Finance questions