Stock X Rate of Return (r) Probability (p) Optimistic 14 % 26 % or 0.26 The Economic Most Likely Status 11% 70 % or 0.70 Pessimistic -8% 4% or 0.04 Calculate the Expected Rate of Return E(r) for Stock X.

Q: ou have been given this probability distribution for the holding-period return for KMP stock:…

A: given,

Q: Stock R has a beta of 1.8, Stock S has a beta of 0.65, the expected rate of return on an average…

A: Required rate of return = risk free rate  +(beta * market risk premium)

Q: 2) Stock Y has a beta of 1.28 and an expected return of 13.7 percent. Stock Z has a beta of 1.02 and…

A: In this question  we are given expected returns and beta of two stocks i.e. Stock Y and Stock Z and…

Q: 4. Stock M and N have the following probability distribution of returns: ETII Returns Economic…

A: Concept. Coefficient of variation of portfolio = risk of portfolio ÷ return of portfolio

Q: Probability of Rate of Return if State Occurs State of Economy 21 61 Economy Recession Stock A Stock…

A:

Q: Stock Y has a beta of 1.2 and an expected return of 11.5 percent. Stock Z has a beta of .80 and an…

A: The risk-free rate of return is the theoretical return on a risk-free investment. Over a given…

Q: distribution for stocksity Youthe following p 2012 State Probability Return on Stock A Return on…

A: The Expected Portfolio or the overall rate of return of the Portfolio is the total return which is…

Q: Stock Y has a beta of 0.6 and an expected return of 8.89 percent. Stock Z has a beta of 2.1 and an…

A: The below expression can be used to calculate the risk-free rate:

Q: Consider the following stocks. Stock Expected return Std. Deviation Beta A 15.9% 27.8% 0.93…

A: Sharpe ratio = (Expected return - Risk free rate of return) / Standard deviation

Q: Consider the following information: Rate of Return If State Occurs State of Probability of State of…

A: Expected Return Expected return of an investment is calculated by multiplying the expected value of…

Q: Consider the following simplified APT model: Expected Risk Premium (%) Factor Market 6.4 Interest…

A: Market factor premium (p1) = 6.4% Interest rate factor premium (p2) = -0.6% Yield spread factor…

Q: What is the standard deviation of the returns on a stock given the following information?…

A: Standard deviation formula: standard deviation=∑i=1nxi-expected return×piwhere,XI= rate of return of…

Q: Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard deviation of…

A: "We will solve the first three sub-parts for you because you asked a question with many sub-parts."…

Q: 7. An analyst estimates that a stock has the following probabilities of return depending on the…

A: The expected return of a stock is the expected value of the return based on the probability of…

Q: I1 12 1 3 1 4 15 '7 1 8 1 9 1 10 1 11 I 12 1 13 1 14 I · 15 9 1 1. 1. Based on the following…

A: Expected return =p1 r1 +p2 r2+p3 r3 Return are taken in percentage to easily calculate. Expected…

Q: Stock Expected Return Standard Deviation Beta 9.00% 15% 0.8 Y 10.75 15 1.2 12.50 15 1.6 Fund Q has…

A: Market risk premium refers to the expected rate of return on an investment which is over and above…

Q: Use the following table of information: Stock X Stock Y Expected Return 14% 18% Standard Deviation…

A: Expected return is a way of calculating profit or loss anticipated by an investor on his investment…

Q: Calculate each stock's required rate of return. Round your answers to two decimal places. rx = ry…

A: Introduction: Capital asset pricing model is the widely used financial model which is used in…

Q: onsider the following information: Probability of State of Economy Rate of Return if St Occurs Stoc…

A: Expected return of the stock depends the return under the probabilistic scenario of the different…

Q: Stock X has a 9.5% expected return, a beta coetticient ot 0.8, and a 35% standard deviation of…

A: As per the rule, i will be answering first three sub-parts of the question. Please repost the other…

Q: What is the standard deviation of stock A if it has the following probabilities and rate of returns.…

A: Expected return can be defined as the weighted average of the distribution of probable returns of…

Q: Stock X has a 10% expected return, a beta coefficient of 0.9, and a 35% standard deviation of…

A: Coefficient of variation =Standard deviation /Mean return x 100

Q: You have been given this probability distribution for the holding-period return for KMP stock: HPR…

A: economy probability HPR boom 0.3 18% normal 0.5 12% recession 0.2 -5%

Q: Stock X and Stock Y has following distribution: Stock X: expected return of 10%, a beta coefficient…

A: (iv) Here the expected return should be greater than the required rate. We should select stock Y…

Q: Required Rate of Return Stock R has a beta of 1.8, Stock S has a beta of 0.35, the expected rate of…

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: Price Forward Dividend 1T Target Est $86.36 $2.08 $105.28 Given the information in the table, if the…

A: Given Forward dividend = $2.08 1T Target Est = $105.28 Required return = 11.5%

Q: Stock A Stock B Market Standard Deviation Return Correlation Coefficient between A & M Correlation…

A: The Capital Asset Pricing Model(CAPM) refers to the relationship between expected return for assets…

Q: B24&Co stock has a beta of 1.69, the current risk-free rate is 3.19 percent, and the expected…

A: Cost of equity of a firm can be calculated using the Capital Asset Pricing Model.

Q: k-free rate of 8%, consider the following data: Required return (%) 12 Stock Beta 0.8 A B 1.2 13 C…

A: Required rate can be calculated from the capital assets pricing model and if required rate is less…

Q: Review the following market information: Current Stock Market Return                    11.25%…

A: As per CAPM, Required Return = Risk free Rate + Beta * (Market return - risk free rate) where, Risk…

Q: required

A: Required rate of return = Risk free rate + Market risk premium * Beta

Q: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: Given, Expected return for Stock L (E(R))= 10.5% Nominal Risk Free Rate (Rf) = 3.5% Expected Return…

Q: Stock Number of Shares Price Expected Return 750 $ 47 14% 650 24 18 400 60 16 625 45 17 What is the…

A: Total weightage of each share in the portfolio = No. of each shares/ Total shares Stock No. of…

Q: wo stock prices for six days are given below.   Price A Price B 25 55 27 59 30 64 28 62 26 58…

A: The standard deviation is a tool that helps to measure the variation between the average data and…

Q: What is the expected return for the following stock? (State your answer in percent with one decimal…

A: Expected rate of return is the profit or loss on the investor that is assumed to be anticipated by…

Q: A stock has a beta of 0.81, the expected return on the market is 11%, and the risk- free rate is…

A: Following details are given in the question : Beta of stock = 0.81 Expected return on the market =…

Q: The expected risk premium on a stock is equal to the expected return on the stock minus the:…

A: The return that the investors are expected in order to invest in a particular investment is referred…

Q: 1) The risk-free rate is 3.7 percent and the expected return on the market is 12.3 percent. Stock A…

A: If the required return (computed using CAPM) is less than the expected return for stock A, the stock…

Q: What is the expected return for the following stock? (State your answer in percent with one decimal…

A: The expected return is the minimum return that we get if we take all the factors into consideration.…

Q: Calculate the standard deviation of returns of Stock Q, given the following information.…

A: Given: State Stock return Probability(P) Recession -5% 25% Normal 10% 50% Boom 25% 25%

Q: tate probability Return on A RETURN ON B POOR 40% -0.06 -0.09 NORMAL 35% 0.16 0.14 GOOD 25% 0.2 0.3…

A: The expected return of a stock is the minimum rate of return that an investor expects from his…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.