What are the expected return and the standard deviation for the CoR Stock?CoR StockIProbabilityRate ofScenarioof ScenarioReturnWorst Case0.10-20%Poor Case0.20-5%Most Likely0.401%Good Case0.205%Best Case0.1030%

Expected return of the CoR stock = 1.40%Standard deviation of the CoR stock =…

Answered: What are the expected return and the…

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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Consider information given in the table below and answers the question asked thereafter: State Probability return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% i. Calculate expected return on each stock? On the basis of this measure, which stockyou will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of thismeasure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of thismeasure, which stock you will choose?
Consider an event study of the following stock. Realised return Market return t = 0 (event day) 0.1 0.1 t =1 0.06 0.04 t = 2 0.03 0.02 t = 3 0.015 0.01 Suppose that the estimated market model is . What is the CAR (cumulative abnormal returns) for t = 3?
Stock A Stock BRate of Return Probability Rate of Return Probability14 0.15 20 0.2016 0.20 18 0.1817 0.30 16 0.3219 0.15 14 0.1420 0.20 10 0.16 a. Calculate the expected return for both stock A and stock B b. Calculate the standard deviation for both stock A and stock B c. Calculate the coefficient of variation for both stock A and stock B.
3. The following information is given with respect to stock A: Scenario Probability Market return 1 0.1 -0.18 2 0.3 0.07 3 0.4 0.16 4 0.2 0.21 Knowing that the Rfis 0.07 compute alpha and the information ratio. Portfolio P return -0.32 0.00 0.22 0.40
A stock’s returns have the following distribution:Demand for theCompany’s ProductsProbability of thisDemand OccurringRate of Return if thisDemand OccursWeak 0.1 (30%)Below average 0.1 (14)Average 0.3 11Above average 0.3 20Strong 0.2 451.0Assume the risk-free rate is 2%. Calculate the stock’s expected return, standard deviation,coefficient of variation, and Sharpe ratio.
Calculate the coefficients of variation for the following stocks: Stock Expected return Standard deviation of return 1 0.065 0.25 2 0.06 0.17 3 0.14 0.24 What is the coefficient of variation for stock 1? What is the coefficient of variation for stock 2? What is the coefficient of variation for stock 3? f you want to get the best risk-to-reward trade-off, which stock should you buy? Stock 2 Stock 3 Stock 1
4. Given the following information, Calculate the (a) expected return and (b) risk (standard deviation) for Stock A and B. Stock A Probabilities 0.20 0.15 0.15 0.50 Possible Outcomes 15% 28% -12% -5% Stock B 0.30 0.10 0.30 0.30 50% Probabilities Possible Outcomes 20% -16% -10% Which stock should be chosen?
Expected return is Probability Stock Retun 0.3 0.06 0.55 0.15 0.15 0.18
What is the standard deviation of stock A if it has the following probabilities and rate of returns. Probability Return 0.3 -5% 0.4 14% 0.3 11% a. 9.11% b. 9.40% c. 8.62% d. 8.21%
K (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.20 0.60 0.20 Common Stock B Return 13% 17% 18% Probability 0.10 0.40 0.40 0.10 (Click on the icon in order to copy its contents into a spreadsheet.) Return -7% 5% 16% 21% www a. Given the information in the table, the expected rate of return for stock A is 16.40 %. (Round to two decimal places.) The standard deviation of stock A is 1.74 %. (Round to two decimal places.) b. The expected rate of return for stock B is 9.8 %. (Round to two decimal places.) The standard deviation for stock B is 6.12 %. (Round to two decimal places.)
You run a regression for a stock's return on a market index and find the following Excel output: Multiple R 0.35 R-Square 0.12 Adjusted R-Square 0.02 Standard Error 38.45 Observations 12 Coefficients Standard Error t-Stat p-Value Intercept 4.05 15.44 0.26 0.80 Market 1.32 0.97 1.36 0.10 The stock is ________ riskier than the typical stock
A3) Finance What is the expected standard deviation of stock A's returns based on the information presented in the table? Outcome Probability of outcome Stock A return in outcome : Good 16% 65.00% Medium 51% 17.00% Bad "?" -35.00%

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What are the expected return and the standard deviation for the CoR Stock? CoR Stock I Probability Rate of Scenario of Scenario Return Worst Case 0.10 -20% Poor Case 0.20 -5% Most Likely 0.40 1% Good Case 0.20 5% Best Case 0.10 30%