You asin investor is interested in acquiring PIZZA shares of stock. Yougather the probability distribution for PIZZA and it ispresented below:Probability ofOccurringRate of return perPerformance of PIZZAperformanceStrong0.3-1%Average0.55%Weak0.29%1. What is the expected return for PIZZA?a.2%b. 3.5%C.4%d. 4.4%2. What is the Variance?a.0.0013b. 0.0026C.0.0033d. 0.02223. The standard deviation isа.2.76%b. 2.98%С.3.21%d. 3.61%4. The coefficient of variation for PIZZA isа.0.90b. 0.72C.0.88d. 1.31

The probability of occurring and rate of return will be Strong = 0.3 and -1% Average = 0.5 and 5%…

Answered: 1. What is the expected return for…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are comparing Stock A to Stock B. Given the following information, what is the difference in the expected returns of these two securities? State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Normal .75 .13 .16 Recession .25 −.05 −.21
Consider information given in the table below and answers the question asked thereafter: State Probability return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% i. Calculate expected return on each stock? On the basis of this measure, which stockyou will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of thismeasure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of thismeasure, which stock you will choose?
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?
Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Probability of State of Security Return if State Occurs State of Economy Recession Economy 0.30 Normal Вoom -6.5% 9.0 16.6 0.55 0.15
Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession 0.30 0.05-0.15 Normal 0.55 0.15 0.15 Boom 0.15 0.20 0.35 Calculate the expected return for the two stocks.
Suppose you observe the following situation: Probability of State 0.35 0.40 0.25 State of Economy Recession Normal Irrational exuberance Stock A Stock B Expected Return Rate of Return if State Occurs Stock B % Stock A a. Calculate the expected return on each stock. (Round the final answers to 2 decimal places.) -0.11 0.10 0.45 -0.09 0.10 0.25 b. Assuming the capital asset pricing model holds and stock A's beta is greater than stock B's beta by 0.65, what is the expected market risk premium? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected market risk premium
Suppose you have the follow information about Intrinsic Co. and the market. What is the Beta of Intrinsic Co.? Probability 0.48 0.35 0.17 a) 1.39 Ob) 1.13 c) 1.00 d) 1.26 Intrinsic Co. Returns 15.4% 17.9% 21.5% Market Returns 9.1% 10.8% 13.5%
For an investment in a stock, the probability of the return being -10.0% is 0.3, 10.0% is 0.4, and 30.0% is 0.3. Given the probability distributions, what is the expected rate of return for the investment?Choices:A. 10.00%B. 9.50%C. 15.00%D. 12.50%E. 13.00%
Suppose you have predicted the following returns for stocks C (Your Company) and T (Your Competitor) in three possible states of nature. What are the expected returns? State Probability C T Boom 0.2 0.13 0.30 Normal 0.5 0.12 0.17 Recession 0.3 0.04 0.02
A stock’s return has the following distribution: Demand for the company’s products Probability of this demand occurring Rate of Return if this demand occurs Weak 0.1 (0.5) Below Average 0.2 (0.05) Average 0.4 0.16 Above Average 0.2 0.25 Strong 0.1 0.60 Use statistical measures to calculate the risk and return of the stock.
The PE ratio is useful because it measures: O A. how much a stock is expected to earn. O B. how much earnings are going to grow. O C. how much an investor is willing to pay for $1 of earnings. « » AMoving to another question will save this response. co search 10:14 PM 10/18/2021
1. Problem 8.01 (Expected Return) eBook Problem Walk-Through A stock's returns have the following distribution: ETT Demand for the Probability of this Rate of Return if Company's Products Demand Occurring this Demand Occurs Weak 0.1 (36%) Below average 0.1 (14) Average 0.4 13 Above average 0.3 29 Strong 0.1 49 1.0 Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: Coefficient of variation: Sharpe ratio:

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1. What is the expected return for PIZZA? а. 2% b. 3.5% C. 4% d. 4.4% 2. What is the Variance? a. 0.0013 b. 0.0026 с. 0.0033 d. 0.0222 3. The standard deviation is а. 2.76% b. 2.98% с. 3.21% d. 3.61% 4. The coefficient of variation for PIZZA is а. 0.90