(10 Percent) Consider the following probability distribution of returns for SeBeta Corporation: Current Stock Price Stock Price in Probability ($) $24 One Year ($) PR $35 25% $26 45% $20 30% a. What is the expected return for SeBeta Corporation? b. What is the standard deviation of the return on SeBeta Corporation?
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- Suppose that your estimates of the possible one-year returns from investing in the common stock of the AYZ Corporation were as follows: Probability of occurrence 0.15 0.25 0.3 0.15 0.15 Possible return -10% 5% 20% 35% 50% What are the expected return? Calculate the standard deviation?The following table is an analyst's best guess for the likelihood of various states of the economy next year and the corresponding return on the stock of EFG Corp. State of the Expected Return Economy Probability (%) Ideal 0.2 20.0 Good 0.4 15.0 Fair 0.3 8.0 Poor 0.1 -10.0 What is the expected percentage rate of return on EFG Corp. stock? Group of answer choices 3.4 10.4 10.8 11.4 not enough informationWhat is the standard deviation of the returns on a stock given the following information? Could you please show the work? State of Economy Probability of state of Economy Rate of return if state occurs Boom 0.3000 0.1500 Normal 0.6500 0.1200 Recession 0.0500 0.0600 Average 0.3333 0.1100
- Suppose your expectations regarding the stock price are as follows: HPR (including dividends) 50.5% 20.5 -18.5 State of the Market Boom Normal growth Recession Probability 0.20 0.22 0.58 Mean Standard deviation - Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) — E(r)]² to compute the mean and standard deviation of the HPR on S S stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Ending Price $ 140 110 80 % %What is the standard deviation of the returns on a stock given the following information? State of Economy Probability of State of Economy Rate of Return if State Occurs Boom .08 .171 Normal .70 .076 Recession .22 .017Suppose your expectations regarding the stock price are as follows: State of the Market Probability Ending Price HPR (including dividends) Boom 0.35 $140 44.5% Normal growth 0.30 110 14.0 Recession 0.35 80 -16.5 Use the following equations to compute the mean and standard deviation of the HPR on stocks:
- Given the following Information, what is the standard deviation of the returns on a portfollo that is invested 40 percent In Stock A, 35 percent in Stock B, and the remainder in Stock C? State of Probability of Economy State Occurring Growth Stagnant Multiple Choice O O O O 243% 6.72% 3.16% 1.68% .07 .93 Rate of Return if State Occurs: Stock A (%) 18.9 7.5 Stock B (%) 10.2 8.5 Stock C (%) 12.1 9.3Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession Probability Ending Price 0.21 $ 140 0.30 110 0.49 80 Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) - E(r)]² to compute the mean and standard deviation of the HPR on S S HPR (including dividends) 50.5% 18.0 -12.5 stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Mean Standard deviation Answer is complete but not entirely correct. 13.65 % 20.48 %Consider the rate of return of stocks ABC and XYZ. Year 12345n ភ្នំឧ១៣៧. ABC ABC XYZ 22% 10 ABC 19 3 1 a. Calculate the arithmetic average return on these stocks over the sample period. (Round your answers to 2 decimal places.) Arithmetic Average XYZ 36% 10 17 0 -8 ABC XYZ b. Which stock has greater dispersion around the mean return? % c. Calculate the geometric average returns of each stock. What do you conclude? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Geometric Average %
- Given the following information, what is the expected return and standard deviation for this stock? State of Economy Probability Of State of Economy Rate of Return Boom 0.40 25% Recession 0.60 5%Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession Probability Ending Price 0.26 $ 140 0.25 110 0.49 80 Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) — E(r)]² to compute the mean and standard deviation of the HPR on - S S Mean Standard deviation HPR (including dividends) 55.0% 21.0 -16.0 stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. % %Assume that you are using the Capital Asset Pricing Model (CAPM) to find the expected return for a share of common stock. Your research shows the following: Beta = βi = 1.54 Risk free rate = Rf = 2.5% per year Market return = E(RM) = 6.5% per year Based on this information, answer the following: A. Based on the beta, how does the stock's risk compare to the market overall? On what do you base your answer? B. Based on the beta, how would you expect the stock's returns to react to a decrease in returns in the market overall? Why? C. According to the CAPM and the information given above, what is the expected return E(Ri) for this stock? D. If the required rate of return on this stock were 7% per year, would you invest? Why or why not?
