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this is full question. There is no other additional info 12-9. Here are the estimated ROE distributions for Firms A, B, and C: Probability 0.1
this is full question. There is no other additional info
12-9. Here are the estimated ROE distributions for Firms A, B, and C: Probability 0.1 0.2 0.4 0.2 0.1 Firm A: 0.0% 5.0% 10.0% 15.0% 20.0% Firm B: (2.0) 5.0 12.0 19.0 26.0 Firm C: (5.0) 5.0 15.0 25.0 35.0 a. Calculate the expected value and standard deviation for Firm C's ROE, ROEA -10%, A=5.5%, ROEB=12%, 8=7.7%. b. Discuss the relative riskiness of the three firms' returns. (Assume that these distributions are expected to remain constant over time.) c. Now suppose that all three firms have the same standard deviation of basic earning power (EBIT/Total assets). CAECB=6c=5.5%. What can we tell about the financial risk of each firm 12-9. Here are the estimated ROE distributions for Firms A, B, and C: Probability 0.1 0.2 0.4 0.2 0.1 Firm A: 0.0% 5.0% 10.0% 15.0% 20.0% Firm B: (2.0) 5.0 12.0 19.0 26.0 Firm C: (5.0) 5.0 15.0 25.0 35.0 a. Calculate the expected value and standard deviation for Firm C's ROE, ROEA -10%, A=5.5%, ROEB=12%, 8=7.7%. b. Discuss the relative riskiness of the three firms' returns. (Assume that these distributions are expected to remain constant over time.) c. Now suppose that all three firms have the same standard deviation of basic earning power (EBIT/Total assets). CAECB=6c=5.5%. What can we tell about the financial risk of each firm Step by Step Solution
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