a) Calculate the average rate of return for each stock during the period 2004 through 2008. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock What would the realized rate of return on the portfolio have been in each year from 2004 through 2008? What would the average return on the portfolio have been during that period? b) Calculate the standard deviation of returns for each stock and for the portfolio. c) Looking at the annual returns on the two stocks, would you guess that the correlation

a) Calculate the average rate of return for each stock during the period 2004 through 2008. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock What would the realized rate of return on the portfolio have been in each year from 2004 through 2008? What would the average return on the portfolio have been during that period? b) Calculate the standard deviation of returns for each stock and for the portfolio. c) Looking at the annual returns on the two stocks, would you guess that the correlation

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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An analyst gathered the following information for a stock and market parameters: stock beta = 1.23; expected return on the Market = 9.32%; expected return on T-bills = 4.75%; current stock Price = $9.08; expected stock price in one year = $13.1; expected dividend payment next year = $3.8. Calculate the expected return for this stock. Please share your answer as a percentage rounded to 2 decimal places.
You are examining a portfolio consisting of three stocks. Using the data in the table a. Compute the annual returns for a portfolio with 25% invested in North Air, 25% invested in West Air, and 50% invested in Tex Oil. b. What is the lowest annual return for your portfolio in part (a)? How does it compare with the lowest annual return of the individual stocks or portfolios in the table above. a. Compute the annual returns for a portfolio with 25% invested in North Air, 25% invested in West Air, and 50% invested in Tex Oil. The annual return for 2014 will be: (Round to two decimal places.) Year 2014 Year 2016 North Air 21% Year 2018 North Air The annual return for 2015 will be: (Round to two decimal places.) Year 2019 29% 6% Year 2015 The annual return for 2016 will be: (Round to two decimal places.) North Air North Air West Air West Air -6% 8% North Air -1% West Air North Air 21% 8% 6% The annual return for 2017 will be: (Round to two decimal places.) West Air Year 2017 The annual…
You own a portfolio that has $2,045 invested in Stock A and $4,096 invested in Stock B. If the expected returns on these stocks are 14 percent and 8 percent, respectively, what is the expected return (in percent) on the portfolio? Answer to two decimals.
What is the volatility of a certain stock index from 2019 to 2022? The return for each year is given by: 4,30%, 10,75%, 2,05%, and 12,70%. Calculate the average return over the four-year period. Then, determine the volatility (standard deviation) of the stock index returns.
You own a portfolio that has $1,600 invested in Stock A and $2,700 invested in Stock B. Assume the expected returns on these stocks are 11 percent and 17 percent, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year TA TB 2017 -17.00% -8.00% 2018 34.00 14.00 2019 29.00 -18.00 2020 -5.00 55.00 2021 21.00 19.00 a. Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your answers to two decimal places. Stock A: 12.40 % Stock B: 12.40 b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.
The returns of a stock follow the normal distribution, with average return of 13.2% and standard deviation of 23.7%. What is the probability that in any given year, the stock's return will be between -34.2% and +36.9%? Assume the following: the one standard deviation probability range is 0.68; the two standard deviation probability range is 0.95; and the three standard deviation probability range is 0.99. 0.685 O 0.955 O 0.750 0.815 O 0.950
Using the data in the following table, and the fact that the correlation of A and B is 0.48, calculate the volatility (standard deviation) of a portfolio that is 70% invested in stock A and 30% invested in stock B. (Click on the following icon in order to copy its contents into a spreadsheet.) Year 2008 2009 2010 2011 2012 2013 Realized Returns Stock A - 10% 20% 5% - 5% 2% 9% Stock B 21% 30% 7% - 3% - 8% 25% The standard deviation of the portfolio is %. (Round to two decimal places.)
Calculate the Holding Period Return (HPR) for the portfolio of the three stocks mentioned in Table 1. Calculate the Holding Period Return (HPR) for each of the stock A, B, and C individually given in Table 1. C. Based upon your calculations, evaluate the Holding Period Return (HPR) to exhibit what change in wealth has taken place?
Suppose that the standard deviation of returns on each individual stock is 80% per annum and that the covariance between each pair of stocks is 0.25. What is the annual standard deviation of an equally weighted well - diversified portfolio?
None
Consider the following six months of returns for two stocks and a portfolio of those two stocks: (Click the icon to view the monthly returns.) Note: The portfolio is composed of 50% of Stock A and 50% of Stock B. a. What is the expected return and standard deviation of returns for each of the two stocks? b. What is the expected return and standard deviation of returns for the portfolio? c. Is the portfolio more or less risky than the two stocks? Why? a. What is the expected return and standard deviation of returns for each of the two stocks? The expected return of Stock A is 0%. (Round to one decimal place.) The expected return of Stock B is 1%. (Round to one decimal place.) The standard deviation of Stock A is 0.04195. (Round to five decimal places.) (Round to five decimal places.) The standard deviation of Stock B is Monthly Returns Stock A Stock B Portfolio Jan 1% 0% 0.5% Feb 4% - 3% 0.5% D Mar -7% 8% ..... 0.5% Apr 2% - 1% 0.5% May - 3% 4% 0.5% Jun 3% - 2% 0.5% WOCHE X ans

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