The expected rate of return of an investment ________. a. equals one of the possible rates of return for that investment b. equals the required rate of return for the investment c. is the mean value of the probability distribution of possible returns d. is the median value of the probability distribution of possible returns e. is the mode value of the probability distribution of possible returns

Q: The expected return for an individual asset is the sum of expected returns in each state of the…

A: Expected rate of return is the most likely and probable and average rate of return that can be…

Q: Use the following information to answer the questions.       State of   Economy Probability of State…

A: Given : State of Economy Probability Return on Asset D Return on Asset E Return on Asset F Boom…

Q: What is the relationship between correlation and the risk of the portfolio's rate of return? i.…

A: Correlation represents the degree of relationship between the movement of prices of assets in a…

Q: What is the expected return on a two asset portfolio and what are its variance and standard…

A: Two Asset portfolio: The portfolio that has 2 assets is called as two asset portfolio.

Q: _______ is a measure of risk while _______ is a measure of risk and liquidity.

A: Capital budgeting is the process of distributing the resources(finance) of the organization in…

Q: A measure of how the returns of two risky assets move in relation to each other is the:

A: By calculating covariance we can identify in what direction the returns move for two securities.

Q: 4. Given the probability and returns associated with each state, what is the expected return? What…

A: Calculations of expected return and standard deviation: Excel workings:

Q: Problem 3: Investments X and Y both offer the same expected rate of return. The standard deviation…

A: When making investment decisions, it's crucial to consider various factors such as expected returns,…

Q: Assume that there is a positive linear correlation between the variable R (return rate in percent of…

A: Positive linear correlation:- It is the relationship between two variables where an increase in the…

Q: 1. Which of the following statements is FALSE? A) When an investment is risky, there are different…

A: A) If investment is risky then it results into different amount of returns depending upon the risk.…

Q: The excess return required on a risky asset over that earned on a risk-free asset is called (a):…

A: A risky asset's return is higher than a less risky asset. But due to the inherent higher risk, there…

Q: The efficient frontier measures risk by using: Group of answer choices B. Correlation A. Risk-free…

A: Efficient frontier refers to the graphical representation of the set of optimal portfolios…

Q: Which of the following is (are) correct regarding average returns? A B The geometric mean is a…

A: In finance the geometric average return is a way to figure out the rate of return, on an investment…

Q: The down payment or equity needed for this investment is $60,000 (outflow) Cash Flow $15,000 5,000…

A: Investment  $  60,000.00 Saving Rate 1.50% Loan Rate 8%

Q: The VIX measures Select one: a.Realized volatility B. Current volatility C. Historical volatility D.…

A: The VIX stands for volatility index. Volatility index was the first benchmark which was created by…

Q: Match each term with the best definition or descriptor. NPV is __________ ( a unitless ratio, a…

A: Solution:- Net Present Value (NPV) means the net present value of cash inflows after the deduction…

Q: Expected return and standard deviation a.  What is the expected return of asset​ b?

A: The expected return is the return that an investor expects on its investment under various…

Q: When the forward rate is equal to the expected future spot rate, the forward rate is said to be…

A: Forward contract are settled in the future times and related to spot rate and they derive value from…

Q: Q3. Explain the following A) Measure of historical returns (Single Asset) B) Measure of historical…

A: Return= Total gain/loss on an asset over a given period of time.

Q: What is the difference between the possible returns and the expected return?

A:

Q: The additional compensation that investors require to take on higher risk investments is the a.…

A: The risk associated with an investment refers to the probability of loss that an investor bears when…

Q: The greater the variability of the possible returns on an investment, _________. a. the lesser the…

A: Variability is a measure of how much variation each return exhibits to the mean return. It is also…

Q: The the expected return, the the risk. O a. lower; higher O b. higher,lower O c. higher; higher more…

A: Expected return and risk are correlated

Q: Suppose the gain from an investment is a normal random variable with mean 2 and standard deviation…

A: VaR=mean-Z*standard deviationLets suppose probability of value at risk is 1%Z score at 99% = 2.326

Q: Illustrate the calculation of the standard deviation of returns?

A: Standard deviation refers to a measure of variation or dispersion of a set of values. We can…

Q: ch of the folowing models CANNT be applied to measure the Value-at-Risk of a cash-flow portfolio?…

A: VaR is the value at risk that how much money of the portfolio is at risk and how much money…

Q: How do you turn an income statement int a forecasted return? And how is it helpful?

A: Return means earn additional on invested amount. Return is a positive factor in every investment.…

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: The standard deviation of return on investment a is 0.10, while the standard deviation of return on…

A: It is a case of calculation of covariance when the data of standard deviation and correlation…

Q: What does standard deviation measure? A. The holding period B. The gain on the investment C. Risk D.…

A: We make investments in different instruments like stocks, bonds etc. These investments gives us some…

Q: What do we mean by internal rate of return (IRR)?

A: Internal rate of return : Internal rate of return is one of the techniques used in capital budgeting…

Q: he longer the time horizon to an investment's maturity, the ________ the expected risk and the…

A: When money is invested in the market there is risk and risk depends on many factors and the return…

Q: How is the standard deviation of returns calculated?

A: Standard deviation is ascertained as follows: The mean worth is dictated by including all the…

Q: Explain real rate of return

A: This is the raw rate of return adjusted with inflation. It is used to ascertain the effective return…

Q: When modeling the expected return of an income producing property, why should it be defined, for…

A: Step 1: Understand the concepts of NOI growth and vacancy rate.NOI (Net Operating Income) Growth:…

Q: Assuming that the rates of return associated with a given asset investment are normally distributed;…

A: a) Calculation of standard deviation:Standard deviation is 0.3516.Standard deviation can be derived…

Q: )define market risk.        b)define delta-hedged position and describe delta hedging.…

A: Market risk is the potential for financial loss that arises from adverse movements in market prices,…

Q: Is the portfolio risk the weighted average of the variance or covariance?

A: The concept of variance which states the deviation from the total average or which is said to be the…

Q: If the internal rate of return (IRR) of a well-behaved investment alternative is equal to MARR,…

A: MARR is the minimum return the management requires from a project after adjusting the risks and…

Q: Does the Present Value (PV) technique is based on return?

A: One of the important decisions that are taken by the management is to make the investment decisions…

Q: Consider the three stocks in the following table. P+ represents price at time t, and Qe represents…

A: Rate of return:The “rate of return” is a financial metric that represents the profit or gain…

Q: T/F. The “Fear Index” is calculated using estimates of implied volatility. Group of answer choices…

A: Fear Index -The volatility index is also referred to as the " Fear Index"