Consider the three stocks in the following table. Pt represents price at time t, and ot represents shares outstanding at time t. Stock Csplits two for one in the last period.Stock PoP1 21756575757555 150 50 15050 150110 150 115 150 60 300ABсс2075P2a. Rate of returnb. Rate of returnRequired:Calculate the first-period rates of return on the following indexes of the three stocks (t=0 to t= 1):Note: Do not round intermediate calculations. Round your answers to 2 decimal places.a. A market-value-weighted index.b. An equally weighted index.22%%

The rate of return (RoR) refers to the gain or loss made on an investment relative to the amount of…

Consider the three stocks in the following table. Pt represents price at time t, and ot represents shares outstanding at time t. Stock C splits two for one in the last period. P2 22 P1 21 75 65 75 75 75 55 150 50 150 50 150 110 150 115 150 60 300 Stock Po A B с 20 75 Required: Calculate the first-period rates of return on the following indexes of the three stocks (t = 0 to t = 1): Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. A market-value-weighted index. b. An equally weighted index. a. Rate of return b. Rate of return % %

Consider the three stocks in the following table. Pt represents price at time t, and ot represents shares outstanding at time t. Stock C splits two for one in the last period. P2 22 P1 21 75 65 75 75 75 55 150 50 150 50 150 110 150 115 150 60 300 Stock Po A B с 20 75 Required: Calculate the first-period rates of return on the following indexes of the three stocks (t = 0 to t = 1): Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. A market-value-weighted index. b. An equally weighted index. a. Rate of return b. Rate of return % %

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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The index model has been estimated for stocks A and B with the following results: = 0.12 +0.670RM+еA RA= RB=0.04 +1.512RM + еB °M= 0.330 σ(eд) = 0.20 σ(eB) = 0.10 What is the covariance between each stock and the market index? (Round your answers to 4 decimal places.) Stock A covariance Stock B covariance
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Suppose you are given the following information about 2 stocks, what is the Sharpe Ratio of a portfolio weighted 55% in stock A and 45% in stock B? E(RA)=16% E(RB)=8% σA=22% σB=12% σA,B=−0.003696 rf=3% Enter rate in decimal form, rounded to 4th digit, as in "0.1234"
Consider three stocks, X, Y, and Z, in the following table. P0, P1, and P2 represent prices at time 0, 1, and 2. Q0, Q1, and Q2 represent shares outstanding. Stock Z splits two for one in the last period. Stocks PO Q0 P1 Q1 P2 Q2 ? X 90 100 95 100 95 100 Y 50 200 60 200 45 200 Z 100 200 110 200 55 400 Using the above information to compute an equally weighted average returns in the three stocks from periods 1 to 2 0% O-1.85% -8.33% -25.00%
Consider the following information: State Probability Stock A Stock B Stock C Boom 0.65 0.26 -0.1 -0.08 Bust 0.35 0.15 0.16 0.18 What is the expected return on an equally weighted portfolio of these three stocks? (Hint: Equally means that each stock has the same weight. Given that there are only 3 stocks, each has a weight of 1/3) Enter the answer with 4 decimals (e.g. 0.1234).
Suppose you are given the following information about 2 stocks, what is the return standard deviation of a portfolio weighted 55% in stock A and 45% in stock B? E(RA)=16% E(RB)=8% σA=22% σB=12% σA,B=−0.003696 Enter rate in decimal form, rounded to 4th digit, as in "0.1234"
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA= 5.0% + 1.30RM + eA RB= -2.0% + 1.6RM + eB sigmaM= 20% ; R-squareA= 0.20 ; R-squareB= 0.12 What is the standard deviation of each stock (write as percentage, rounded to 2 decimal places)?
Suppose a market consists of four stocks. The number of shares outstanding for each stock as well as the stock prices in two consecutive days are as follows: Stock A Stock B Stock C Stock D Shares outstanding 200 1000 400 3000 I $5 $30 $100 $40 Ро $15 $25 $80 $50 a) Compute the percentage increase in the price-weighted index for this market. b) Compute the percentage increase in the value-weighted index for this market. P₁
Consider the three stocks in the following table. P(t) represents price at time t, and Q(t) represents shares outstanding at time t. Stock C splits two-for-one in the last period. What is the rate of return for the price-weighted index that is formed using Stocks A, B, and C from time period 1 to time period 2? B C zero P(1) 95 45 100 -20.83% 20.83% None of the above Q(1) 100 200 200 P(2) 95 45 50 Q(2) 100 200 400
Consider a market value-weighted index with only 3 stocks: Stock A, Stock B, and Stock C. The current shares and current prices, as well as the original number of shares and original prices, of the stocks are summarized in the following table: Current Shares Current Price Original Shares Original Price Stock A Stock B Stock C 300 100 200 Assuming the base value is 100, the index level is $48 $69 $91 100 100 100 $28 $79 $51 Round your answer to 4 decimal places.
Stocks A and B have the following returns: (Click on the following icon in order to copy its contents into a spreadsheet.) 123 45 Stock A 0.09 0.07 0.13 -0.01 0.09 Stock B 0.05 0.01 0.06 0.02 -0.04 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.42, what is the expected return and standard deviation of a portfolio of 60% stock A and 40% stock B?
Stocks A and B have the following returns: (Click on the following icon o in order to copy its contents into a spreadsheet.) Stock A Stock B 1 0.09 0.04 0.06 0.03 3. 0.12 0.06 4 - 0.04 0.02 5 0.09 -0.02 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.47, what is the expected return and standard deviation of a portfolio of 51% stock A and 49% stock B? a. What are the expected returns of the two stocks? The expected return for stock A is (Round to three decimal places.)

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