Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 6, Problem 2WM
Following the procedures in the previous question, find five years of monthly returns for Target. Using the first two years of data, what is Target’s beta? What is the beta using the latest two years of data? How stable is the beta estimate? If you use all five years of data, how close is your estimate of beta to the estimate reported in Yahoo’s Key Statistics section?
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Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.2 percent and the standard deviation was 10.6 percent.
a.
What is the probability that your return on this asset will be less than –9.7 percent in a given year? Use the NORMDIST function in Excel® to answer this question.
b.
What range of returns would you expect to see 95 percent of the time?
c.
What range of returns would you expect to see 99 percent of the time?
Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.2 percent and the
standard deviation was 10.6 percent.
a. What is the probability that your return on this asset will be less than -9.7 percent in a given year? Use the NORMDIST function
in Excel® to answer this question.
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
b. What range of returns would you expect to see 95 percent of the time?
Note: Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do
not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
c. What range of returns would you expect to see 99 percent of the time?
Note: Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do
not round intermediate calculations and…
Ten annual returns are listed in the following table: (Click on the following icon in order to copy its contents into a spreadsheet.)
- 19.7%
16.6%
17.7%
-49.3%
43.8%
1.2%
- 16.3%
-3.4%
a. What is the arithmetic average return over the 10-year period?
b. What is the geometric average return over the 10-year period?
c. If you invested $100 at the beginning, how much would you have at the end?
45.8%
BILS
a. What is the arithmetic average return over the 10-year period?
The arithmetic average return over the 10-year period is%. (Round to two decimal places.)
45.4%
Chapter 6 Solutions
Essentials Of Investments
Ch. 6.5 - Prob. 1EQCh. 6.5 - In light of each firm’s exposure to the financial...Ch. 6 - Prob. 1PSCh. 6 - When adding a risky asset to a portfolio of many...Ch. 6 - A portfolio’s expected return is 12%, its standard...Ch. 6 - An investor ponders various allocations to the...Ch. 6 - The standard deviation of the market-index...Ch. 6 - Suppose that the returns on the stock fund...Ch. 6 - Use the rate-of-return data for the stock and bond...Ch. 6 - Prob. 8PS
Ch. 6 - Prob. 9PSCh. 6 - Prob. 10PSCh. 6 - Prob. 11PSCh. 6 - Prob. 12PSCh. 6 - Stocks offer an expected rate of return of 10%...Ch. 6 - Suppose that many stocks are traded in the market...Ch. 6 - You can find a spreadsheet containing annual...Ch. 6 - Assume expected returns and standard deviations...Ch. 6 - Prob. 17PSCh. 6 - Prob. 18PSCh. 6 - A project has a 0.7 chance of doubling your...Ch. 6 - Investors expect the market rate of return this...Ch. 6 - The following figure shows plots of monthly rates...Ch. 6 - Prob. 22PSCh. 6 - Prob. 23PSCh. 6 - Prob. 25CCh. 6 - Prob. 1CPCh. 6 - Prob. 2CPCh. 6 - Abigail Grace has a $900,000 fully diversified...Ch. 6 - Prob. 4CPCh. 6 - Prob. 5CPCh. 6 - Prob. 6CPCh. 6 - Prob. 7CPCh. 6 - Prob. 1WMCh. 6 - Following the procedures in the previous question,...Ch. 6 - Prob. 3WMCh. 6 - Prob. 4WM
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