Jill believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shownbelow. What's the standard deviation of the estimated returns?Economic ConditionsStrongNormalWeak19.55%18.98%19.37%18.62%Probability30%40%30%Return34.0%10.0%-15.0%

The level of risk involved with investments is measured by standard deviation. It should be noted…

Jill believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution show below. What's the standard deviation of the estimated returns? Economic Conditions Strong Normal Weak 19.55% 18.98% Probability 30% 40% 30% Return 34.0% 10.0% -15.0%

Jill believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution show below. What's the standard deviation of the estimated returns? Economic Conditions Strong Normal Weak 19.55% 18.98% Probability 30% 40% 30% Return 34.0% 10.0% -15.0%

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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Similar questions

If the economy booms, RTF, Incorporated, stock is expected to return 10 percent. If the economy goes into a recessionary period, then RTF is expected to only return 3 percent. The probability of a boom is 65 percent while the probability of a recession is 35 percent. What is the variance of the returns on RTF, Incorporated, stock? Multiple Choice .001115 .033388 .000334 .037750 .000725
Suppose that an investor has a chance of investing 90% fund in A with the remainder 10% purchasing shares in B. The returns on these companies respond differently to the general activity within the economy. Calculate the expected returns and standard deviation for this two-asset profolio. Event i State of thye economy Probability Pi Return on A RA Return on B RB Boom 0.3 20% 3% Growth 0.4 10% 35% Recession 0.3 0% -5%
Following are three economic states, their likelihoods, and the potential returns: Economic State Fast growth Slow growth Recession Probability 0.27 0.35 0.38 Standard deviation Return 32% 4 -22 Determine the standard deviation of the expected return. (Do not round intermediate calculations and round your answe decimal places.) %
Lisa is a graduate student from Holmes Institute who is actively involved in investment in the securities market. She had established one investment portfolio 5 years ago. Supposing that the forecast on the economic situation and returns of the portfolio will be as follows in the next year, calculate the expected return, variance and standard deviation of the portfolio. State of economy Probability Rate of returns Mild Recession 0.30 - 5% Growth 0.40 12% Strong Growth 0.30 25%
Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .21 −.04 Normal .65 .16 Boom .14 .22 Calculate the expected return. Multiple Choice 13.15% 2.27% 12.64% 13.27% 12.01%
What is the risk premium for the following returns if the risk-free rate is 4%? State Probability Return Boom .25 .25 Good .50 .10 Recession .25 0 a. 11.25% b. 7.25% c. 9.25% d. 8.25%
The returns on shares of Valley Transporter are predicted under the following various economic conditions: Recession -0.11 Normal +0.08 Boom +0.25 If each economy state has the same probability of occurring (33.33%), what is the variance of the stock?
Mansukh
1. Suppose your expectations regarding the stock market are as follows: State of the Probability HPR Economy Boom 0.3 33% Normal growth 0.3 19 Recession 0.4 -15 a. What is the expected return, variance and standard deviation? 2. Assume that you manage a risky portfolio with an expected rate of return of 13% and a standard deviation of 29%. The T-bill rate is 5%. Your client chooses to invest 75% of a portfolio in your fund and 25% in a T-bill money market fund. a. What is the expected return and standard deviation of your client's portfolio? b. What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? Explain the sharp ratio.
Question is in the screen shot
Felix is estimating the return for Togo Sledding and has determined the following probabilities and expected returns. Togo's expected return is closest to: Expected Probability Return Roaring expansion Steady high growth Steady moderate growth Slowing Recession 9% 17% 11% 14% 15% 8% 42% 3% 23% -5%
Consider the following information: Rate of Return if State Occurs State of Probability of State of Economy Stock A Stock B Stock C Economy Boom 0.15 0.32 0.42 0.33 Good 0.45 0.19 0.13 0.12 Poor 0.30 -0.05 -0.08 -0.06 Bust 0.10 - 0.16 -0.28 0.09 a. Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? (Round your answer to 2 decimal places. (e.g., 32.16)) Expected return % b-1What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places. (e.g., 32.16161)) Variance b-2What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Standard deviation %

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