Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wanting to check my work; TIA! Returns earned over a given time period are called realized returns. Historical data on realized returns is often used

Wanting to check my work; TIA!
image text in transcribed
Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Five years of realized returns for Happy Dog Soap Inc. (Happy Dog) are given in the following table: 2012 Stock return 25.00% 2013 17.00% 2014 30.00% 2015 42.009 2016 13.00% Also note that: 1. While Happy Dog was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on Happy Dog's equity are calculated as arithmetic returns Given this retum data, the average realized return on Happy Dog Soap Inc. stock is 25.40% of Happy Dog's historical returns. Based on this condusion, the standard deviation of The preceding data series represents a sample Happy Dog's historical returns is 1.78959 If investors expect the average realized return on Happy Dog Soap Inc.'s stock from 2012 to 2016 to continue into the future, its expected coefficient of variation (CV) is expected to equal 0.4494

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_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

Foundations of Finance The Logic and Practice of Financial Management

Authors: Arthur J. Keown, John D. Martin, J. William Petty

8th edition

132994879, 978-0132994873

More Books

Students also viewed these Finance questions

Question

please do the instruction!

Answered: 1 week ago