Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. % Return on T-Bills, Stocks and Market Index State of the Economy Probability TBills Phillips Payup Rubbermade Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean Standard Deviation Coefficient of Variation Covariance with MP Correlation with Market Index Beta CAPM Req. Return Valuation (Overvalued/Undervalued/Fairly Valued) Nature of stock (Aggressive/Defensive) Question Fill the parts excluding probability section in the above table that are highlighted in Bold. You will notice that there are nineline items.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 4P: Investment advisors estimated the stock market returns for four market segments: computers,...

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Question

Consider the following information about the various states of economy and the returns of
various investment alternatives for each scenario. Answer the questions that follow.
% Return on T-Bills, Stocks and Market
Index
State of the Economy Probability TBills Phillips Payup Rubbermade Market Index

Recession 0.2 7 -22 28 10 -13

Below Average 0.1 7 -2 14.7 -10 1

Average 0.3 7 20 0 7 15

Above Average 0.3 7 35 -10 45 29

Boom 0.1 7 50 -20 30 43

Mean

Standard Deviation

Coefficient of Variation

Covariance with MP

Correlation with Market Index

Beta

CAPM Req. Return

Valuation
(Overvalued/Undervalued/Fairly
Valued)

Nature of stock
(Aggressive/Defensive)

Question
Fill the parts excluding probability section in the above table that are highlighted in Bold. You will notice that there are nineline items.

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