assesment 2

The returns on assets C and D are strongly correlated with a correlation coefficient of 0.80. The variance of returns on C is 0.0009, and the variance of returns on D is 0.0036. What is the covariance of returns on C and D? Give typing answer with explanation and conclusion

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If two returns are positively related to each other, they will have a ________, and if they are negatively related to each other, the ______________. Group of answer choices positive covariance, covariance will be negative positive covariance, standard deviation will be negative negative covariance, covariance will be zero negative covariance, covariance will be positive   This type of risk affects a large number of assets, each to a greater or lesser degree.   Group of answer choices systematic risk unsystematic risk idiosynchratic risk principle of diversification   True/False. The Dividend Discount Model can be applied to firms that do not pay dividends. Group of answer choices True False

30. Based on the Regression result for KLIC, if Variance of the Residuals is equal 0.0126 and Variance of SPY equals to 0.0037, what must be the amount total risk for KLIC? A. 0.0163 B. 0.0417 C. 0.0362 D. 0.0192 E. 0.0704

Each of the following statements contains an error. Describe the error and then correct the statement. (9p)   a. For a symmetric distribution, the mean will be smaller than the median.   b. When taking SRSs from a large population, larger sample sizes will result in larger standard deviations of x.    c. The central limit theorem states that for large n, the shape of the sampling distribution is approximately the shape of the population distribution.

The variances of stocks A and B are 1 percentage square and 4 percentage square, respectively. If the covariance between the two stocks is 0.6 percentage square, what is the correlation? Dont

The variance of X is 0.36. The standard deviation of Y is 0.38. The correlation between the two is 0.01. What is the variance of a portfolio that invests -62.59% in X and the rest in Y? Note: Type -9 if the answer does not make sense.

True/false Questions: Decide whether the following statements are true or false. (3p)   a. A normal distribution will usually have outliers.   b. A z-score represents the number of standard deviations above or below the mean.    c. The mean of the sampling distribution of the means is equal to the mean of the population from which the values were sampled.

Which of the following statements are correct? I.The standard deviation is a measure of risk.II.The variance of yearly returns is roughly the variance of monthly returns multiplied with 12.III.To decide whether asset A is more risky than asset B we can either use their standard deviations or their variances.     Group of answer choices II and III only I, II and III I and II only I and III only

The variance of returns is 0.09 for Bitcoin (BTC) and 0.04 for PayPal Holdings, Inc. (PYPL). The covariance between the returns of BTC and PYPL is 0.006. The correlation of returns between BTC and PYPL is   A. 0.30. B. 0.24. C. 0.17. D. 0.10.

True or false? Beta of MSFT is 0.7 and beta of RCL is 1.33. One can conclude that unsystematic risk of RCL is higher than unsystematic risk of MSFT.

A linear regression of the return on NVIDIA on the return of S&P 500 gives you thefollowing result:RNVIDIA = 0.03 + 1.45*RS&P500 + errorNVIDIA.Suppose that the standard deviation of the S&P 500 return is 0.20 and the standarddeviation of the error term (errorNVIDIA) is 0.10.What fraction of the total variance of NVIDIA is systematic?

Which of the following statements about the mean-variance criterion is correct?   The mean return equals the riskless interest. Investors select assets that provide the highest variance for the same or higher expected return. Investors select assets that provide the highest rate of return. Investors select assets that provide the lowest variance for the same or higher expected return.

The variance of expected returns is equal to the square root of the expected returns. a. True b. False

Other factors equal when planning a monetary unit sample, which of the following is true regarding the maximum tolerable misstatement (M)?   a. M is based on the sample results.   b.   the larger M is, the lower the confidence.   c.    the larger M is, the smaller the sample.   d.  the larger the expected misstatement, the smaller M is.

The sample size of a test of controls varies inversely with:                                 Expected Population      Tolerable                                     deviation rate              Rate A.                                      Yes                          Yes B.                                        No                         No C.                                       Yes                         No D.                                        No                         Yes

Evaluating Stand-Alone Risk: Example 9-4, (page 411) Conestoga Ltd. has the following estimated probability distribution of returns.                                     Return                          Probability                                         4%                                .20                                       12%                                .50                                       14%                                .30 Calculate Conestoga’s expected return, the variance and standard deviation of its expected return and the return’s coefficient of variation.  Please explain to me in detail how the variance of returns is obtained. I don't understand the equation used to get the answer.

1.Suppose you find, as research indicates, that in the cross-section regression of the CCAPM, the coefficients of factor loadings on the Fama-French model are significant predictors of average return factors (in addition to consumption beta). How would you explain this phenomenon?

Assume the mean and standard deviation of sample returns are​ 8% and​ 10% respectively. Assuming that the returns are normally​ distributed, what is the probability of an actual return below​ 8%?

What would be the expected value, variance and standard deviation of an event that always took the value one as its outcome? O 1, 0,0 О 1, 1,0 O 1, 0, 1 О 1, 1, 1

EXAMPLE• Consider the following information:State            Probability        ABC, Inc. ReturnBoom               .25                          0.15Normal             .50                         0.08Slowdown        .15                         0.04Recession         .10                        -0.03• What is the expected return?• What is the variance?• What is the standard deviation?

a) Discuss the difference between a price-weighted index and a value-weighted index. Give one example for the price-weighted index and one example for the value-weighted index and discuss any problems/advantages associated with the specific indices. b) We assume that investors use mean-variance utility: U = E(r) – 0.5 × Ao², where E(r) is the expected return, A is the risk aversion coefficient and o? is the variance of returns. Given that the optimal proportion of the risky asset in the complete port- folio is given by the equation y* = E , where r; is the risk-free rate, E(rp) is the expected returm of the risky portfolio, o, is variance of returns, and A is the risk aversion coefficient. For each of the variables on the right side of the equation, discuss the impact of the variable's effect on y* and why the nature of the relationship makes sense intuitively. Assume the investor is risk averse. Ao

The following information pertains to data that have been gathered in the process of estimating a simple least-squares regression: mean value of the dependent variable    30 mean value of the independent variable 10 Coefficient of the independent variable     3 Number of observations                            12  What is the "a" value for the least squares regression model?