A stock's returns have the following distribution: Probability Rate of Return 0.1-2% 0.2 -10% 0.4 10% 0.2 20 % 0.1 30% Calculate the stock's a) expected return, b) standard deviation, and c) coefficient of variation.

A stock's returns have the following distribution: Probability Rate of Return 0.1-2% 0.2 -10% 0.4 10% 0.2 20 % 0.1 30% Calculate the stock's a) expected return, b) standard deviation, and c) 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 5P

See similar textbooks

Related questions

Q: Barnegat Light sold 150,000 shares in an initial public offering. The underwriter's explicit fees…

A: Explicit fees =$60,000market price=$38offering price =$30outstanding shares= $150,000

Q: Which of the following statements is most CORRECT? Oa. The primary rationale for most operating…

A: A merger refers to the combination of two or more companies into a single entity. This typically…

Q: What formula in cell B14 will calculate the intrinsic value of stock? A 10 EPS1 11 Required Return…

A: The intrinsic value of a stock is the present value of all future cash flows from the stock. The…

Q: Calculate the after-tax return of a(n) 5.625.62 percent, 20-year, A-rated corporate bond for an…

A: The objective of this question is to calculate the after-tax return of a corporate bond for…

Q: Please help solve: Companies with excess cash often employ share repurchase plans in place of or…

A: The expected stock price after the share repurchase for Sixty-Second Avenue Company is $26.20 per…

Q: You purchase 200 shares for $50 a share, and after a year the price rises to $70. What is…

A: Hence, the question has been solved in detailed explanation manner.Explanation:The breakdown of your…

Q: t. What is the project's total nominal cash flow from assets for each year? (A negative

A: Cash flow is the movement of funds into and out of a company over a given time period. It shows the…

Q: A particular security's equilibrium rate of return is 10%. For all securities, the inflation premium…

A: Before determining the security's default risk premium, it's crucial to acknowledge that the…

Q: What price should you receive for the bond?.

A: A bond's price is determined by the bond's future cash flows, which include periodic interest…

Q: Question 29 (1 point) A home buyer buys a house for $225,000. She pays 20% cash, and takes a…

A: The objective of the question is to calculate the biweekly mortgage payment for a home buyer who has…

Q: You've collected the following information from your favorite financial website. 52-Week Price Lo…

A: Stock price refers to the price at which the stocks are being traded in the stock market among…

Q: Suppose you are buying your first condo for $300,000, and you will make a $15,000 down payment. You…

A: The objective of this question is to calculate the monthly mortgage payment for a condo purchase.…

Q: You have an investment opportunity that promises to pay you $18, 499 in four years. Suppose the…

A: Investment is the key allotment of monetary assets with the purpose of creating wages or…

Q: Mick's Enchiladas has preferred stock outstanding that pays a dividend of $7 at the end of each…

A: Dividend = $7 per ShareStock Price = $85 per Share

Q: Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the…

A: Number of shares = 3 millionPayment of Proceeds to Beedles Inc. = $14 million or…

Q: You are explaining how a variable annuity functions to one of your clients. Which of the following…

A: Because the account's value is subject to change based on the success of the market, variable…

Q: man.1

A: The objective of the question is to calculate the present value and the compound discount of a…

Q: What are the monthly payments you will receive if your retirement nest egg of $ 1,000,000 is in a 5%…

A: Present valueof the retirement Amount $ 10,00,000.00Interest rate5%Tenure, years20Compounding…

Q: Fanning Company has a choice of two investment alternatives. The present value of cash inflows and…

A: Net present value= Present value of cash inflows - Initial Cash outflowIf NPV of project is…

Q: Andersen's Nursery has sales of $318,400, costs of $199,400, depreciation expense of $28,600,…

A: Sales$318,400costs$199,400Depreciation expenses$28,600Interest expenses$1,100Tax rate35%Dividend…

Q: It will take exactly N₁ years for the value in your current portfolio to double at 5%. If we use the…

A: Rule of 70 is the rule which tell that how much time taken to double the value.

Q: NoNuns Companies has a 21 percent tax rate and has $350 million in assets, currently financed…

A: Tax rate = 21%Assets = $350 millionEquity worth = $37 per shareDebt percentage = 20%Interest on debt…

Q: What is the present value (PV) of $40, 000 received ten years from now; assuming the interest rate…

A: The objective of this question is to calculate the present value of a future sum of money. In this…

Q: a. What is the yield to maturity of each bond? b. What is the duration of each bond?

A: The yield to maturity indicates the overall return an investor can anticipate from a bond if they…

Q: What is the NPV of a project that COSTS $0.5M today and cash inflows $5,000 monthly, paid annually,…

A: Initial Cost = i = $500,000Monthly Cash Flow = cf = 5000 * 12 = $Time = t = 10 Cost of Capital = r =…

Q: Megan can purchase a new car for $30,000. Alternatively, in addition to a down payment of $2,000,…

A: A lease arrangement is a formal agreement whereby the property owner grants the user of the asset…

Q: To accumulate $100,000 for your child's 18th birthday, you need to invest a certain amount annually,…

A: An annuity is a financial product that provides a series of regular payments to an individual over a…

Q: Compute the yield to maturity for a zero coupon bond with a maturity of 15 years and a face value of…

A: The objective of this question is to calculate the yield to maturity (YTM) for a zero-coupon bond.…

Q: Market price of convertible bonds 100 norminal value of 8% convertible bonds can be converted in…

A: Here,NominalValue of Convertible Bond is 100Coupon Rate of Bond is 8%Time Period of Conversion is 4…

Q: Pfd Company has debt with a yield to maturity of 5.5 %, a cost of equity of 12.7 %, and a cost of…

A: The Weighted Average Cost of Capital (WACC) may be a budgetary metric utilized to evaluate the cost…

Q: Given the information below for HooYah! Corporation, compute the expected share price at the end of…

A: By giving investors ownership stakes in their shares, businesses can raise funds. Voting on…

Q: (engineering economics) A building was purchased by the city government with a gradual payment of…

A: Here's the analysis for both options :without renovationfinding cost,benefit ,present value of…

Q: Suppose your credit card issuer states that it charges a 19.25% nominal annual rate, but you must…

A: Nominal annual rate = r = 19.25%Compound = n = Monthly = 12

Q: Q6. What's the present value of a perpetutity that pays $1,524 per year if the aprropriate interest…

A: The objective of this question is to calculate the present value of a perpetuity. A perpetuity is an…

Q: Carpenter Plumbing is experiencing growth so its management team has decided to begin paying…

A: The dividend discount model will be used here. As per the dividend discount model the value of a…

Q: If you are the buyer of a futures contract you are Long Speculating Hedging Short

A: The question is asking about the position one takes when they buy a futures contract. In financial…

Q: You have a $1,000 face value bond. You know that it originally had a maturity of 15 years, one year…

A: Face value = $1,000Coupon rate = 6.6%YTM = 5.5%Original years to maturity = 15 years

Q: Consider the following returns for two investments. A and B, over the past four years: Investment 1:…

A: Before computing the Sharpe ratio, it is essential to calculate both the mean (which provides the…

Q: Pricing Stock Issues in an IPO Zang Industries has hired the investment banking firm of Eric,…

A: It refers to the offer price earned by evaluating the current value of equity in consideration with…

Q: You have been given the following return information for a mutual fun he market index, and the…

A: Sharpe ratio defines the return associated with the risk for the comparison by the investors and…

Q: Red Lizard Construction just borrowed $57,000.00. The terms of the loan require the company to make…

A: A loan refers to a contract where money is forwarded by one party to another on the promise of…

Q: Nesmith Corporation's outstanding bonds have a $1,000 par value, a 6% semiannual coupon, 19 years to…

A: The price of the bonds having $1,000 par value is $806.32 Explanation:Bond price is the price of the…

Q: B

A: The objective of this question is to determine the expected annual growth rate of the dividend for…

Q: What is the Macaulay duration of a semiannual-pay 8.97 percent coupon bond with 10 years to maturity…

A: Macaulay duration is a measure used in finance to estimate the weighted average time it takes for a…

Q: Last year Rocco Corporation's sales were $700 million. If sales grow at 6.0% per year, how large (in…

A: The objective of the question is to calculate the future value of Rocco Corporation's sales given a…

Q: Please answer in your own words After the pandemic ended, most of us are back to in-person work.…

A: The objective of this question is to understand how the new norms of remote work and study, and the…

Q: You are offered an annuity that will pay $12,000 a year for eight years (that is, eight payments),…

A: An annuity is a series of periodic payments made/received in exchange for a lump sum payment. It is…

Q: Problem 2 Suppose you are interested in futures contract of a stock which pays dividends…

A: Dividend yield = 5%Current stock price = $30Contract size = 50 sharesAnnual interest rate =…

Q: After reading the new account insert in his monthly statement, Tony Mercadante determined that the…

A: The objective of the question is to determine the amount of FDIC coverage Tony and Cynthia have on…

Q: Illustrate the impact of changes in the dividend, the growth rate, the expected return on the…

A: The value of a stock is determined by several factors, including the dividend, the growth rate, the…

Question

A stock's returns have the following distribution: Probability Rate of Return
0.1 -2% 0.2 -10% 0.4 10 % 0.2 20 % 0.1 30% Calculate the stock's a) expected return, b) standard deviation, and c)
coefficient of variation.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Answer (a) Expected return

VIEW

Step 2: Answer (b) Standard deviation

VIEW

Step 3: Answer (c) Coefficient of variation

VIEW

Solution

VIEW

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, then what is Stock A’s beta?
The probability distribution of returns for the two stocks X and Y are as follows: Probability 0.1 0.3 0.05 0.25 0.15 0.15 For each of the two stocks, calculate: a. The expected return. b. Variance of returns c. Volatility of returns. Stock X 0.05 -0.1 0.08 -0.08 0.20 0.12 Return Stock Y 0.13 0,04 -0.12 0.21 0.1 -0.05
A stock’s returns have the following distribution:Assume the risk-free rate is 2%. Calculate the stock’s expected return, standard deviation,coefficient of variation, and Sharpe ratio.
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% Calculate covariance and coefficient of correlation between the returns of thestocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfoliocomprising of $45,000 invested in stock A and remaining amount in stock B.Calculate risk and return of your portfolio.
The market and Stock J have the following probability distributions: ProbabIlity rM rJ 0.3 15% 20% 0.4 9 5 0.3 18 12 A. Calculate the expected rates of return for the market and Stock J. B. Calculate the standard deviations for the market and Stock J
The market and Stock J have the following probability distributions: Probability rM rJ 0.3 15% 20% 0.4 9 5 0.3 18 12 Calculate the expected rates of return for the market and Stock J. Calculate the standard deviations for the market and Stock J. Calculate the coefficients of variation for the market and Stock J.
You are given the following probability distribution of returns for a stock. Use the data to calculate the expected return, standard deviation of returns, and coefficient of variation of returns for the stock. Report the CV to 4 decimal places (13.36% = 0.1336). Return Probability 8.0% 0.20 10.0% 0.10 12.0% 0.40 15.0% 0.20 16.0% 0.10
The market and Stock A have the following probability distributions: Probability Return on market Return on Stock A 0.2 18% 16% 0.3 12% 14% 0.5 10% 11% Calculate the expected rates of return for the market and Stock A. Calculate the coefficient of variation for the market and Stock A (Standard deviation for market is 3.0265% and standard deviation for Stock A is 2.0224%).
Assume that the covariance between Stock A and Stock B is -28%^2 (0.0028). Compute the expected rate of return and variance of rate of return of Donald’s portfolio.
What is the standard deviation of stock A if it has the following probabilities and rate of returns. Probability Return 0.3 -5% 0.4 14% 0.3 11% a. 9.11% b. 9.40% c. 8.62% d. 8.21%
The index model has been estimated for stock A with the following results: RA = 0.01 + 1.2RM + eA. σM = 0.15; σ(eA) = 0.10. The standard deviation of the return for stock A is
The index model for stock A has been estimated with the following result: RA = 0.01 + 0.9RM + eA. If σM = 0.25 and R2A = 0.25, the standard deviation of return of stock A is: