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- wsparon mure Financial analysts have estimated the retums on shares of the Woods Corporation and the overall market portfolo under two economic states nature as follows For Woods the state dependent returns are -0.02 in recession, and 0.05 in an economic boom. For the market the state dependent retums are -0.06 in recession, and 0.12 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom le 0.50 Compute the covenance between Woods and the market *State your answer in decimal form, working your analysis using at least five decimal places of accuracy CHECK ANSWERAnswer(s): (Your response(s) are in the boxes.) Financial analysts have estimated the returns on shares of the Goldday Corporation and the overall market portfolio under two economic states nature as follows. For Goldday the state dependent returns are -0.06 in recession, and 0.10 in an economic boom. For the market the state dependent returns are -0.08 in recession, and 0.18 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom is 0.50. Compute the covariance between Goldday and the market. .7111 *State your answer in decimal form, working your analysis using at least four decimal places of accuracy. RESUBMIT ANSWERFinancial analysts have estimated the returns on shares of the Goldday Corporation and the overall market portfolio under two economic states nature as follows. For Goldday the state dependent returns are -0.06 in recession, and 0.10 in an economic boom. For the market the state dependent returns are -0.08 in recession,and 0.18 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom is 0.50. Compute the standard deviation of the market._____________ * State your answer in decimal form, working your analysis using at least four decimal places of accuracy.
- Financial analysts have estimated the returns on shares of the Goldday Corporation and the overall market portfolio under two economic states nature as follows. For Goldday the state dependent returns are -0.06 in recession, and 0.08 in an economic boom. For the market the state dependent returns are -0.06 in recession, and 0.14 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom is 0.50. Compute the beta of Goldday. * State your answer in decimal form, working your analysis using at least four decimal places of accuracy.Financial analysts have estimated the returns on shares of the Goldday Corporation and the overall market portfolio under two economic states nature as follows. For Goldday the state dependent returns are -0.06 in recession, and 0.08 in an economic boom. For the market the state dependent returns are -0.12 in recession, and 0.16 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom is 0.50. Compute the covariance between Goldday and the market. * State your answer in decimal form, working your analysis using at least four decimal places of accuracy.You may attempt this question 3 more times for credit Financial analysts have estimated the retums on shares of Drucker Corporation and the overall market portfolio under various economic conditions as follows. The return for Drucker in the following three economic states of nature are forecasted to be -20% in recession, +9% in moderate growth, and +33% in a boom. Estimates for the market as a whole in the same economic states are -10% in recession, +9% in moderate growth, and +23% in boom The analyst considers each state to be equally likely What is the expected return for Drucker Corporation? 1% What is the expected return of the market? Place your answers in percentage form (NOTE: NOT DECIMAL FORM) using two decimal places and no percentage sign. For example, an answer of five point five five percent would be entered 5.55 CHECK ANSWER
- Financial analysts have estimated the returns on shares of the Goldday Corporation and the overall market portfolio under two economic states nature as follows. For Goldday the state dependent returns are -0.04 in recession, and 0.10 in an economic boom. For the market the state dependent returns are -0.12 in recession,and 0.14 in boom. The analyst estimates that the probability of a recession is 0.50 while the probability of an economic boom is 0.50.Compute the standard deviation of the market.Investment advisors estimated the stock market returns for four market segments: computers, financial, manufacturing, and pharmaceuticals. Annual return projections vary depending on whether the general economic conditions are improving, stable, or declining. The anticipated annual return percentages for each market segment under each economic condition are as follows: Assume that an individual investor wants to select one market segment for a new investment. A forecast shows improving to declining economic conditions with the following probabilities: improving (0.2), stable (0.5), and declining (0.3). What is the preferred market segment for the investor, and what is the expected return percentage? At a later date, a revised forecast shows a potential for an improvement in economic conditions. New probabilities are as follows: improving (0.4), stable (0.4), and declining (0.2). What is the preferred market segment for the investor based on these new probabilities? What is the expected return percentage?K-Life financial services Limited uses risk-adjusted return on capital (RAROC) to measure performance on several aspects. In this regard, imagine that an investment officer wants to execute a transaction with the following characteristics: Probability of default (PD) = 30 basis points Loss given default (LGD) = 55% Exposure at default (EAD) = K 1.45 million Expected loss (EL) = K 2,750 This is a loan to a company in the Agro industrial. The firm’s economic capital (EC) model is based on the 99% confidence level, with an average standard deviation of 2.15%. The risk-free rate of return is 6%. Assume that the bank has set a RAROC hurdle rate of 15% and this transaction has a net profit of K10, 500. REQUIRED: Compute the K-life’s risk-adjusted rate of return on this transaction. Now assume that K-life could also have made a loan for the same amount to a firm in the service industry, and that the standard deviation for economic capital purposes in this case is 1.29%. Compute the bank’s…
- DAS Co. is preparing its financial forecast for next year and its AFN is negative. This means that Select one: O a. the predicted change in total assets must be negative. O b. sales growth must be negative. O c. the dividend payout ratio must be greater than the predicted growth rate in sales. O d. the predicted change in spontaneous liabilities must be greater than the predicted change in total assets.Suppose the estimated linear probability model used by an FI to predict business loan applicant default probabilities is PD = .03X1+ .02X2 - .05X3+ error, where X1 is the borrower's debt/equity ratio, X2is the volatility of borrower earnings, and X3= 0.10 is the borrower’s profit ratio. For a particular loan applicant, X1= 0.75, X2= 0.25, and X3= 0.10. Required: What is the projected probability of default for the borrower? What is the projected probability of repayment if the debt/equity ratio is 2.5?(Related to Checkpoint 8.3) (CAPM and expected returns) a. Given the following holding-period returns, LOADING... , compute the average returns and the standard deviations for the Sugita Corporation and for the market. b. If Sugita's beta is 1.89 and the risk-free rate is 6 percent, what would be an expected return for an investor owning Sugita? (Note: Because the preceding returns are based on monthly data, you will need to annualize the returns to make them comparable with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) c. How does Sugita's historical average return compare with the return you should expect based on the Capital Asset Pricing Model and the firm's systematic risk? Month Sugita Corp. Market 1 2.4 % 1.0 % 2 −0.8 2.0 3 1.0 2.0 4 −1.0 −1.0 5 6.0 7.0 6 6.0…