You are planning for long term investment in a stock. After specific analysis you have two options i.e., Stocks of Company A and Stocks of Company B. You have following data on the stock prices of both companies; Time Line Share A Share B 2010 15 125 2020 41 320 Please select the share that is more likely give you better return in the long run. Also, show your selection process.
Q: Explain how a financial market operates?
A: Note : As per our guidelines, we can only answer one question at once. Please post other questions…
Q: You are considering an investment in either individual stocks or a portfolio of stocks. The two…
A: Average return on a stock over a given number of years is the mean of yearly returns. That is,…
Q: The following table is an analyst's best guess for the likelihood of various states of the economy…
A: Economy Probability (%) Ideal 0.2 20.0 Good 0.4 15.0 Fair 0.3 8.0…
Q: The attached file contains hypothetical data for working this problem. Goodman Corporation’s and…
A: Here, Weight of G industries is 60% Weight of L Incorporated is 40% Inorder to calculate portfolio…
Q: You are evaluating two stocks and trying to decide if they are underv You are given the following…
A: Alpha of stock shows that how is the performance of stock based on the risk involved in the stock so…
Q: Calculate the expected return for XOM stock. (b) Calculate the standard deviation of returns…
A: The expected return is the amount of profit or loss that an investor can expect to have on the…
Q: You were analyzing a stock and came up with the following probability distribution of the stock…
A: Formula for calculating the coefficient of variation for stocks would be= Standard deviation/ mean
Q: You are comparing the preferred stocks of 2 companies. League of Legendary Wizards and Grand Flying…
A: An individual shall select a stock that has a higher or equal expected return than the required…
Q: to be unchanged for the year.) How many shares of each stock should you purchase to meet your…
A: The risk index shows the result of risk assessment or risk inherent in the investment in particular…
Q: The table below shows information about the performance of stocks A and B last year. Return…
A: Given Information:
Q: The table below shows information about the performance of stocks A and B last year. Return…
A: The coefficient of variation of Stock A is 0.55 (8.3%/15%) and Stock B is 0.15 (2.1%/14%). Stock B…
Q: The table below shows information about the performance of stocks A and B last year. Return…
A: The nature of stock that may comprise of small or medium or large capital, dividend policy, risk…
Q: method
A: Minimum regret can be arrived at by: Regret = Best pay off - Payoff received
Q: which of the following is best given your client’s objective?
A: Answer. Call Options: These are options that provide the user or buyer of this option the right…
Q: For the coming year you have determined that the following possibilities are most likely for stock…
A: Working of the expected return on the stock A is shown:
Q: What is the standard deviation of the returns on a stock given the following information? Could you…
A: For calculating the standard deviation using the following formula. SD = ∈[ P(GR-ER)2] Where P =…
Q: Aisyah, a new investor cannot decide whether to invest in Stock Media Prima or Stock Astro, wwa w ww…
A: Alternative A is 100% investing in Stock Media prima To Find: Expected return of both…
Q: Compute the expected and required return on each stock, determine the appropriate trading strategy
A: Excel Spreadsheet: Excel Workings:
Q: You are given information on two stocks. Stock AXE has a required return of 12.25% and analysts…
A: In this we have to calculate the expected return and required return and compare.
Q: Aisyah is a new investor; she approached RHB Securities and the firm has provided her with the…
A: Hi, in order to answer part "f", d also needs to be calculated. d) Expected Return of Stock X:
Q: Consider the following information given to > answer the series of questions below to determine the…
A: Solution:- We know, expected rate of return in case of data (ie. Which involves probability) is the…
Q: Two investors are evaluating General Electric’s stock for possible purchase.They agree on the…
A: Determine the willingness of the investors to make payment on the same price for the stocks of…
Q: a. Given the information in the table, the expected rate of return for stock A is enter your…
A: Expected Rate of Return = (Probability 1 x Return 1) + (Probability 2 x Return 2) + (Probability 3 x…
Q: You are considering an investment in either individual stocks or a portfolio of stocks. The two…
A: Since you have asked a question with multiple sub-parts, we will solve the first three for you. If…
Q: ou were analyzing a stock and came up with the following probability distribution of the stock…
A: Coefficient of variation = Standard deviation / Expected return
Q: Aisyah, a new investor cannot decide whether to invest in Stock Media Prima or Stock Astro, or in a…
A: The expected return of a stock: The expected return of a stock is the sum of the product of the…
Q: A close family friend has approached you to help her determine which of the two common stocks she…
A: Expected return is that which was based on past track record of company with the help of expected…
Q: You were analyzing a stock and came up with the following probability distribution of the stock…
A: Formula for the expected return: Probability*expected return of stock Formula for coefficient of…
Q: A stockbroker calls you and suggests that you invest in the Lauren Computer Company. After analyzing…
A: Expected return = (-0.60*0.05) + (-0.30*0.20) + (-0.10*0.10) + (0.20*0.30) + (0.40*0.20) +…
Q: a) Calculate the expected return and standard deviation for share A and B. b) Calculate the required…
A: Part a: The expected return represents the average return the investor earned from the change in the…
Q: Question content area bottom Part 1 a. Given the information in the table, the expected rate…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: You are trying to develop a strategy for investing in two different stocks. The anticipated annual…
A: The probability distribution is: Probability Stock X Stock Y 0.1 -130 -150 0.2 20 50 0.4…
Q: As an investor you have a required rate of return of 14 percent for investments in risky stocks. You…
A: The dividend growth model is a mathematical method that investors can use to calculate a realistic…
Q: An analyst is studying the movement of the stock ABC. His research and came up with a different…
A: Probability of Economic conditions; Strong (Ps) = 0.30 Normal (Pn) = 0.50 Weak (Pw) = 0.20 Rate…
Q: Two investors are evaluating IBM’s stock for possible purchase. They agree on the expected value of…
A: Yes, both the investor should pay same price for the stock. Since, both the investors have same…
Q: Give the return of the stock in which you would most likely invest and show the preferred order of…
A: Capital asset pricing model is used to determine the expected return from an individual security for…
Q: For purposes of the Stock Market Game and real-life comparisons as to how an investment has…
A: Return on investment is the percentage rate which shows the percentage of profit earned on the…
Q: On the basis of the two stocks' expected and required returns, which stock would be more attractive…
A: Here,
Q: An investor wishes to add new stocks to her portfolio. She has information about two assets, Stock A…
A: For deciding which stock to purchase we need to calculate the required rate of return on each…
Q: Tareen investing company invested equal amount in five stocks to form investment portfolio which has…
A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…
Q: You were analyzing a stock and came up with the following probability distribution of the stock…
A: Formulas:
Q: Calculate the average rate of return for each stock during the 5-year period. Do not round…
A: Average rate of return can be defined as an average percent increase of value of an investment over…
Q: A prospective investor obtained the following information on XY stock: Date Stock Prices ($)…
A: The time-weighted rate of return (TWR) is a measurement of a portfolio's compound rate of growth.…
Q: Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have…
A: Portfolio is the collection of securities or investments. It is the different combination of…
Q: geometric average return on this stock
A: The geometric return shows the calculation of the average rate of return on investment compounded in…
You are planning for long term investment in a stock. After specific analysis you have two options i.e., Stocks of Company A and Stocks of Company B. You have following data on the stock prices of both companies;
Time Line
Share A
Share B
2010
15
125
2020
41
320
Please select the share that is more likely give you better return in the long run. Also, show your selection process.
Step by step
Solved in 5 steps
- A close family friend has approached you to help her determine which of the two common stocks she should invest in. Common Stock A Common stock B Probability Return Probability Return 0.25 11% 0.25 -5% 0.15 15% 0.25 6% 0.6 19% 0.25 14% 0.25 22% Required: Calculate the expected returns of stock A Determine the risk (standard deviation) and return of stock A Calculate the expected returns of stock B Determine the risk (standard deviation) and return of stock B Which investment should your friend invest in?Step by step explaination (use attached diagram) This question relates to Diagram 6 from the diagrams, which shows the probability distributions of returns for Shares N, P and Q. In which share would a risk-averse investor be most likely to invest? Select one: a. Share N b. Share P c. Share Q d. We need more information about the investor's risk tolerance to determine which share the investor would prefer.A close family friend has approached you to help her determine which of the two common stocks she should invest in Common Stock A Common Stock B Probability Return Probability Return 0.25 11% 0.25 -5% 0.15 15% 0.25 6% 0.6 19% 0.25 14% 0.25 22% Required: Calculate the expected returns of stock A Determine the risk (standard deviation) and return of stock A Calculate the expected returns of stock B Determine the risk (standard deviation) and return of stock B Which investment should your friend invest in? Jenny has decided that she will invest her $100,000 savings in stocks as follows: What rate of return should Jenny expects to receive on her portfolio? Company Percentage of Investment Expected rate of return Standards Company Limited 45% 9% Starbucks 15% 12% Treasury Bill 40% 4%
- You a portfolio manager. You have been provided the following information on stock prices and dividends. Based on the given information, what is the geometric average return on this stock? Please show all the calculations by which you came up with the final answer.Questions: a. Compute the expected return for stock X and for stock Y b. Compute the standard deviation for stock X and for stock Y. c. Determine the best course to take for investing.I. The Beta of a Stock You want to invest in the stock market but are not sure which stock to purchase. Information is the key to making an informed investment decision. One piece of information that many stock analysts use is the beta of the stock. Go to Wikipedia (http:/len.wikipedia.org/wiki/ Beta_%28finance%29) and research what beta measures and what it represents. 1. Approximating the beta of a stock. Choose a well-known company such as Google or Coca-Cola. Go to a website such as Yahoo! Finance (http://finance.yahoo.com/) and find the weekly closing price of the company's stock for the past year. Then find the closing price of the Standard & Poor's 500 (S&P500) for the same time period. To get the historical prices in Yahoo! Finance click the price graph, choose Basic Chart, then scroll down and select Historical Prices. Choose the appropriate time period and select Weekly. Finally, select Download to Spreadsheet. Repeat this for the S&P500, and copy the data into the same…
- A close family friend has approached you to help her determine which of the two common stocksshe should invest in. Common Stock A Common Stock BProbability Return Probability Return 0.3 11% 0.2 -5% 0.4 15% 0.3 6% 0.3 19% 0.3 14% 0.2 22%Required:a) Calculate the expected returns of stock A b) Determine the risk (standard deviation) and return of stock Ac) Calculate the expected returns of stock B d) Determine the risk (standard deviation) and return of stock Be) Which investment should your friend invest in?Discuss the risks and payoffs of the following positions, accompanied by payoff graphs. Buy a stock. Buy a call. Buy stock and sell a call option on the stock (covered call).(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 Probability 0.15 0.35 0.35 0.15 (Click on the icon in order to copy its contents into a spreadsheet.) Common Stock B Return 13% 14% 18% Return - 6% 7% 15% 21% a. Given the information in the table, the expected rate of return for stock A is 14.6 %. (Round to two decimal places.) The standard deviation of stock A is %. (Round to two decimal places.)
- (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 0.25 0,50 0.25 Probability 0.10 0.40 0.40 0.10 (Click on the icon in order to copy its contents into a apreadsheet) Common Stock B Return 10% 17% 18% Return -4% 7% 13% 20% G a. Given the information in the table, the expected rate of return for stock A is 15.5% (Round to two decimal places) The standard deviation of stock A is (Round to two decimal places.)You meet with two investors who have different expectations for stock CBD that can be addressed with various positions in puts, calls, and the underlying stock (or combination). For each investor, document the (1) name of the recommended strategy, (2) the components of the suggested trade, and (3) draw the payoff as a function of the stock price. a. Investor A already holds CBD stock and wants to lock in gains if the stock drops below its current levels, while maintaining upside exposure. b. Investor B wants to profit if CBD’s upcoming earnings announcement is either unexpectedly good or disappointingly bad. c. Investor C already holds CBD stock and believes the stock will not increase much in the near term. As such, she wants to earn some extra income using options.You are considering two stocks and have determined the following information (refer to image): a. Which of the two stocks has the higher expected return?b. Which stock is riskier?c. Given your answers to the two previous questions, what stock is preferred?