Consider a stock with value S = 50. Each period the stock moves up or down, independently, in discrete steps of 5. The probability of going up is p = 0.7 and down 1-p= 0.3. What is the expected value and the variance of the value of the stock after 3 period? %3D

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suppose a risk free rate is 6% and the market premium is 7%. D1 is 1.25 per share and stock beta is 1.15. What is the required return?

Given the following information on five stocks, construct: a. A simple price-weighted average b. A value-weighted average c. A geometric average d. What is the percentage increase in each average if the stock prices change to those in Column I? e. What is the percentage increase in each average if the stock prices change from those in the Price column to those in Column II? f. Why were the percentage changes different in parts (d) and (e)? g. If you were managing a fund and wanted a source to compare your results to, which of the three averages would you prefer to use, and why? Stock Price # of Shares I II A B C D E F $12.00 150,000 $14.00 125,000 $11.00 200,000 $ 22.00 80,000 $8.00 30,000 $29.00 140,000 $12.00 $12.00 $14.00 $14.00 $20.00 $11.00 $ 22,00 $ 22.00 $8.00 $15.00 $29.00 $29.00

Select all that are true with respect to historical data on risk and return in the U.S. financial markets since about 1926, Group of answer choices A portfolio of small stocks has earned higher returns than large stocks, with less risk A portfolio of small stocks has earned higher returns that large stocks, with higher risk Stocks have outperformed government bonds, albeit with higher risk With respect to a diversified stock portfolio, the longer the holding period, the higher the risk. With respect to a diversified stock portfolio, the longer the holding period, the lower the risk.

Stocks A and B have the following probability distributions of expected future returns: Probability     A     B 0.1 (7 %) (26 %) 0.1 3   0   0.5 14   22   0.2 20   26   0.1 36   50   Calculate the expected rate of return, , for Stock B ( = 14.20%.) Do not round intermediate calculations. Round your answer to two decimal places.   % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 18.68%.) Do not round intermediate calculations. Round your answer to two decimal places.   % Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places.   Is it possible that most investors might regard Stock B as being less risky than Stock A?   If Stock B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense. If Stock B is more highly correlated with the market than A, then it might have a higher…

Stock A has a correlation with the market of 0.53. Assuming that the standard deviation of returns for Stock A is 24.0% and that the standard deviation of returns for the market is 10.0%, what is beta for stock A? A 1.31 B. 1.27 C. 0.17 D. 0.22

Stock A has a beta of 1, the risk-free rate is 4% and the return on the market is 9%.  If the market risk premium changes by 7%, by how much will the required return on Stock A change? (i.e. required return after change - required return before the change) answer format:  show your answer in percent (without the % sign) and to 1 decimal place. For example, 12.56 should be shown as 12.6

The returns of a stock follow the normal distribution, with average return of 13.2% and standard deviation of 23.7%. What is the probability that in any given year, the stock's return will be between -34.2% and +36.9%? Assume the following: the one standard deviation probability range is 0.68; the two standard deviation probability range is 0.95; and the three standard deviation probability range is 0.99. 0.685 O 0.955 O 0.750 0.815 O 0.950

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