XYZ stock's returns will have the following probability distribution during the possible states of the economy. a. Calculate the expected return on XYZ stock. b. Calculate the standard devivation of XYZ stock returns. c. Calculate the coefficient of variation of XYZ stock. State of Economy Probability Return Boom 15% 22.75% Normal 70% 12.60% Recession 15% -15.20% Expected Return: % Standard Deviation: Coefficient of Variation:

XYZ stock's returns will have the following probability distribution during the possible states of the economy. a. Calculate the expected return on XYZ stock. b. Calculate the standard devivation of XYZ stock returns. c. Calculate the coefficient of variation of XYZ stock. State of Economy Probability Return Boom 15% 22.75% Normal 70% 12.60% Recession 15% -15.20% Expected Return: % Standard Deviation: Coefficient of Variation:

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 6P: The market and Stock J have the following probability distributions: a. Calculate the expected rates...

See similar textbooks

Similar questions

Now assume that the stock is currently selling at $30.29. What is its expected rate of return?
XYZ stock's returns will have the following probability distribution during the possible states of the economy.a. Calculate the expected return on XYZ stock.b. Calculate the standard devivation of XYZ stock returns.c. Calculate the coefficient of variation of XYZ stock.State of Economy Probability Return Boom 30% 32.50% Normal 40% 10.25% Recession 30% -15.75%
We know the following expected returns for stocks A and B, given the different states of the economy: State(s) Probability E(rA,s) E(rB,s) Recession 0.1-0.06 0.04 Normal 0.5 0.09 0.07 Expansion 0.4 0.17 0.11 What is the standard deviation of returns for stock B?
Consider an event study of the following stock. Realised return Market return t = 0 (event day) 0.1 0.1 t =1 0.06 0.04 t = 2 0.03 0.02 t = 3 0.015 0.01 Suppose that the estimated market model is . What is the CAR (cumulative abnormal returns) for t = 3?
Consider the following information: Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession .20 .010 −.35 Normal .55 .090 .25 Boom .25 .240 .48 Calculate the expected return for the two stocks. Calculate the standard deviation for the two stocks.
Suppose you have predicted the following returns for stock C in three possible states of nature. What is the expected return of stock C? State Probability Return Boom 0.3 0.15 Normal 0.5 0.10 Recession 0.2 0.02
1. Considering the following information for stock K and stock M. Probability of state of economy State of economy Boom Normal Recession 0.3 0.5 0.2 Rate of return if state occurs K 25% 15% -12% M 18% 4% 0% 1) What is the expected return for stock K? For Stock M? 1) What is the standard deviation for Stock K" For stock M? iii) What is the coefficient of variation for Stock K? For stock M2 iv) If you invest 60% of your money in stock K and 40% in stock M, what is the expected return of the portfolio v) Find the return of your portfolio when a) economy is booming, b) economy is normal; and c) recession occurs vi) What is the standard deviation for your portfolio? (18 points in total)
You are analyzing a stock that has the following returns given the various states of economy. State of Economy Probability Return Recession 0.12 -7.20 Normal 0.68 6.80 Boom 0.2 15.40 What is the expected return on this stock?
You have the following stock with expected returns given the different economic outcomes. What is the overall standard deviation of returns? Probability Economic state Recession Normal Boom 25% I 50% 25% Return -5% 8% 25%
a. Based on the following information, calculate the expected return and standard deviation for each of the following stocks. What are the covariance and correlation between the returns of the two stocks? Calculate the portfolio return and portfolio standard deviation if you invest equally in each asset. Returns State of Economy Prob K Recession 0.25 -0.02 0.034 Normal 0.6 0.138 0.062 Boom 0.15 0.218 0.092 b. A portfolio that combines the risk-free asset and the market portfolio has an expected return of 7 percent and a standard deviation of 10 percent. The risk-free rate is 4 percent, and the expected return on the market portfolio is 12 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .45 correlation with the market portfolio and a standard deviation of 55 percent? c. Suppose the risk-free rate is 4.2 percent and the market portfolio has an expected return of 10.9 percent. The market portfolio has a variance of…
Consider the following information: State of Economy Boom Bust Probability of State of Economy a. Expected return b. Variance .65 .35 Rate of Return if State Occurs 16.03 % Stock A .11 .12 Stock B .19 .06 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the variance of a portfolio invested 16 percent each in A and B and 68 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) Stock C .37 -.05
(b)The market M and Stock J have the following probability distributions: State of the economy Probability RM RJ Boom 0.3 15% 20% Depression Recovery 0.4 9% 5% 0.3 18% 12% Required to (1) Calculate the expected rates of retum for the market and Stock J. (ii) Calculate the standard deviations for the market and Stock J.