Q3. Find the Expected Return, Variance, and Standard Deviation for the Stock Returns 1 and 2. Also, you are requested to find the Covariance and Coefficient of Variation with the following information. Probability Stock - 1 Stock - 2 42% 09% 01% 0.22 04% 39% 0.05 38% 47% 31% 41% 18%

Q: Stocks X and Y have the following probability distributions of expected future returns: Calculate…

A: Standard deviation: The standard deviation is a measurement of the variance or dispersion of a set…

Q: The correlation of returns between A and B is:

A: Correlation: It is a measure of statistics that shows the degree to which two variables move in…

Q: Calculate the expected return for Stock media Prima and Stock Astro 2. Calculate the standard…

A: Probability (%) (1) Stock Media Prima(%) (2) Expected returns (3)=(1)×(2) Stock Astro (4)…

Q: 3. Consider three stocks A, B and C and a market index M with the following prices: Year то T1 T2…

A: Note: This question has several sub-parts. The first three have been answered below

Q: The metric that is used to show the extent to which a given stock’s return move up and down with the…

A: A trend is the wide upward or downward movement of a stock's price over time. Upward movement is…

Q: Consider the following stocks. Stock Expected return Std. Deviation Beta A 15.9% 27.8% 0.93…

A: Sharpe ratio = (Expected return - Risk free rate of return) / Standard deviation

Q: Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation,…

A: Expected rate of return on stock is that rate which an investor can expect to be generated from the…

Q: Estimate the return and standard deviation of the historical returns on Stock A that were: 15%, 20%,…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: What is the correlation between returns of stock S and T, given that covariance between stocks is…

A: Given, Covariance = 2.419 Standard deviation =1.23 and 2.21

Q: (a) Calculate the expected rate of return, variance and standard deviation of Stock X & Stock Y.…

A: “Hey, since you have posted a question with multiple sub-parts, we will answer first three sub parts…

Q: b) The covariance between stocks A and B is 0.0014, standard deviation of stock A is 0.032, and…

A: Returns do not rise in the proportion to the level of the risk assumed. Therefore, b the figure is…

Q: Refer to the table below: Expected return, E(R) Standard deviation, o Correlation 3 Doors, Inc. 17%…

A: A portfolio is created by collecting different classes of assets to minimum the risk associated with…

Q: Given the following returns for Stock X and stock Y Stock X % return   Stock Y % return 2…

A: Calculate the variance and standard deviation as follows:

Q: Calculate the correlation coefficient for the portfolio using the following information: Variance of…

A: The correlation coefficient is the measurement of the relationship between two variables and the…

Q: You are given the following information about 4 stocks: Variance-Covariance Matrix 3 0.0325 0.0125…

A: Weight in stock 1 (w1) = 0.25 Weight in stock 2 (w2) = 0.25 Weight in stock 3 (w3) = 0.25 Weight in…

Q: Given the following information below for Stock A, calculate its standard deviation 6. Where: wwwww…

A: Expected return can be defined as the return which an investor expects to be generate on a project…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: The question is based on the concept of co-variance calculation between stock and market index , in…

Q: Stocks A B and C display the following parameters: Expected Return A  15%         Variance 9%2…

A: Expected return of A (Ra) = 15% Standard deviation of A (Sa) = Square root of variance = 3% Expected…

Q: Consider the two (excess return) index model regression results for A and B:   RA = 0.8% + 1RM…

A: Residual standard deviation is measured by using the firm specific risk.

Q: The following shows the expected percentage returns on three stocks over the next six years: Stock…

A: Here,

Q: From the following information calculate Beta for stock A, required return of stock A as per CAPM…

A: In this we have to calculate the Beta of stock and from that get required rate.

Q: Stock A has the following returns over the past periods. Calculate the downside risk measured by…

A: Downside risk is the risk of the market and it is a statistical measure which indicate the risk of…

Q: Calculate the expected return, variance, and standard deviation for a portfolio of four equally…

A: The expected return of the portfolio is the return that an investor gets based on the weightage…

Q: The covariance between stocks A and B is 0.0014, standard deviation of stock A is 0.032, and…

A: Covariance: It is a tool that helps in judging the movement of two options. If the covariance…

Q: b) The covariance between stocks A and B is 0.0014, standard deviation of stock A is 0.032, and…

A: Correlation determines how assets move in relation to each other. A coefficient of 1 means a perfect…

Q: The following shows the expected percentage returns on three stocks over the next six years: Stock…

A: Standard deviation is used to measure the portfolio risk. It is the under root of variance of each…

Q: The index model has been estimated using historical excess return data for stocks A, B, and C, with…

A: "Hi there, thanks for posting the questions. But as per our Q&A guidelines, we must answer the…

Q: Q3. Find the Expected Return, Variance, and Standard Deviation for the Stock Returns 1 and 2. Also,…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: You have the following information: A B с Alpha 1.85% 2% -2.36% 0% Beta 1.36 0.95 1.98 1 Res. 2.00%…

A: The single index model: The single index model expresses the total returns of a portfolio as the…

Q: Consider two stocks, Stock D, with an expected return of 13 percent and a standard deviation of 31…

A: Weight of stock in minimum variance portfolio is calculated by this formula. sigma stands for…

Q: Stocks A and B have the following returns: Stock A Stock B 1 0.09 0.06 2 0.05 0.02 0.13 0.05 4 -…

A: A combination of the different types of funds and securities for the investment is term as the…

Q: Stocks X and Y have the following probability distributions of expected future returns: Calculate…

A: Here, Probability X Y 0.3 90% -35% 0.4 15% 0 0.3 -60% 20 Expected rate of Return of X…

Q: Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .092, E(RB) =…

A: Portfolio is a bundle of various investments. To manage the risk, investors invest the money in…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A:

Q: You run a regression for a stock's return on a market index and find the following Excel output:…

A: The regression analysis shows the value of intercept and the slope ie (The Risk free return and the…

Q: You are given the following probability distribution for a stock: Probability…

A: Calculation of expected return, standard deviation and coefficient of variation using excel is as…

Q: Suppose you are given the following information about 2 stocks, what is the return standard…

A: The degree of data dispersion from the mean is indicated by the standard deviation. Standard…

Q: The following are estimates for a stock A. Stock Expected ret. beta firm-specific variance, or…

A: A type of unavoidable risk that occurs from the political, economic, and financial factors is term…

Q: The following information are available: [3]     Stock A Stock B Expected Return 16% 12%…

A: Given  Stock A Expected Return - 16% Stock B Expected Return - 12% Stock A Standard Deviation - 5%…

Q: a. What are the expected returns of the two stocks? b. What are the standard deviations of the…

A: Expected return on a stock can be calculated as the mean of all returns on the stock. That is…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.