A stock is expected to return 13 percent in an economic boom, 10 percent in a normal economy, and 3 percent in a recessionary economy. All else equal, which one of the following will lower the overall expected rate of return on this stock? A decrease in the probability of a recession occurring An increase in the rate of return in a recessionary economy A decrease in the probability of an economic boom

Q: What is the variance on a stock that has expected rate of return of 18% in a boom economy, 8% in a…

A: Variance is sum of [Probability*(Return-Mean)^2]

Q: Consider the following information:            State of Economy Probability of State of Economy Rate…

A: The expected return is the anticipated amount of profit or loss from an investment. The expected…

Q: Suppose that expectations about the S&P 500 index and the T-bill rate are the same as they were in…

A: Treasury bills yield a lower return.

Q: A security act as an insurance against market crashes. It pays $1 if the stock market drops 10% or…

A: The Cost of Capital Model (CAPM) is a financial framework used to estimate the expected return on a…

Q: Which statement is NOT correct? The distribution of returns does not affect the expected average…

A: Dividend yield and capital gain yield are the two parts that can be separated out from the overall…

Q: A stock is expected to return chance of a normal economy a 22% chance of a boom and a 11% chance of…

A: The expected return refers to the estimated return from the investment after considering the…

Q: What is the expected rate of return and standard deviation on this stock?

A: The expected rate of return is a statistical degree used for studying the portfolio. It is the…

Q: live in a world where three future states are pos these states of the economy. State Probability om…

A: Expected rate is the weighted rate of return based on the probability of happening the event over…

Q: Given the following information, what is the variance of the returns on this stock? State of Economy…

A: Variance refers to the deviation from the standards, and it implies the range to within which the…

Q: A stock is expected to return 9% in a normal economy, 14% if the economy booms, and lose 4% if the…

A: Expected rate of return is the profit or loss on the investor that is assumed to be anticipated by…

Q: only return 2 percent. The probability of - percent while the probability of a recession is 26 perce…

A: There are different possibilities in the economy and depending on the economy the company can earn…

Q: There is 9 percent probability of recession, 24 percent probability of a poor economy, 44 percent…

A: The expected rate of return is the amount of interest an investor can hope to receive on an average…

Q: Bhupendra

A: Here's how you can calculate the expected return and the standard deviation of returns:Expected…

Q: The stock market fluctuates in the short-term but tends to increase in the long term, with an…

A: The stock market represents a set of exchanges where buyers & sellers meet for the exchange of…

Q: economy booms RTF, Inc stock is expected to return 13 percent.  If the economy goes into a…

A: There are different possibilities of the economy and depending on the economy the company can earn…

Q: Which one of the following statements is correct? A- Stock prices are independent of the economic…

A: Stock price movement is based on market sentiments or in other words how investors perceive the…

Q: is expected to return 20% percent in a boom, 10% percent in a normal economy, and lose 2 percent in…

A: Standard deviation is the measure of the total risk of the stock and it shows that how much the…

Q: uppose that the probability that the economy will be in a recession one year from now is 0.25. If…

A: In this question, the probability that the economy will be in a recession one year from now is 0.25…

Q: Following are four economic states, their likelihoods, and the potential returns:      Economic…

A: Expected return is defined as the probable return expected from an investment which is based on the…

Q: If economy booms, RTF, Inc. stock is expected to return 11 percent.  If the economy goes into a…

A: State of Economy Probability RTF (R) BOOM 73% 11% Recession 27% 3% To Find: Variance

Q: stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to re 3…

A: Expected rate is a weighted rate of return depending on the different scenarios of the economy and…

Q: The returns on the common stock of New Image Products are quite cyclical. In a boom economy, the…

A: Standard Deviation of the return is the square root of variance Variance = sum of (Probability *…

Q: Assume that the economy can experience four possible states: high growth, normal growth, rece those…

A: Investment value = $1,000State of economyProbabilityReturnsHigh growth0.2+20%Normal…

Q: A stock will have a loss of 14.6 percent in a recession, a return of 13.3 percent in a normal…

A:

Q: Consider the following information: State of Economy Recession Normal Boom Probability of State of…

A: The expected return using probabilities is calculated using following equation Expected return =…

Q: State of Economy Probability of State of Economy Rate of Return if State Occurs   Recession .21…

A: Expected return = 0.21*-13% + 0.49*15% + 0.30*34%

Q: A stock has an expected return of 10.23 percent. Based on the following information, what is the…

A: The profit or loss that an investor anticipates on an investment with known historical rates of…

Q: The common stock of Manchester & Moore is expected to earn 16.2 percent in a recession, 8 percent in…

A: Portfolio is the combination of stocks and securities being held in business. Return on portfolio is…

Q: What is the expected return on a portfolio that will decline in value by 10% in a recession, will…

A: Expected return of portfolio is weighted average return on all possible situations of economy.

Q: There is 6 percent probability of recession, 21 percent probability of a poor economy, 47 percent…

A: Data for expected return calculation Probability Return 6% -20.80% 21% 4.40% 47% 12.20%…

Q: A stock is expected to return 13 percent in an economic boom, 10 percent in a normal economy, and 3…

A: Expected Return = Sum of probablity * returns

Q: An analyst estimates there is a probability of 22 percent that there will be a recession next year.…

A: Given information: Probability for recession state is 22% and return in this state is -18%.…

Q: A stock is expected to return 11% in a normal economy, 19% if the economy booms, and lose 8% if the…

A: Economy Expected Return Probability Normal  11% 65% Boom 19% 25% Recession -8% 10%

Q: You live in a world where three future states are possible: Boom, Normal and Recession. See the…

A: Standard deviation measures the risk involved in earning a return from the stock. lower the risk…

Q: Given the following information, what is the expected return and standard deviation for this stock?…

A: In the given case, the probability and the rate of return of each state of economy . Expected return…

Q: Use the following information on states of the economy and stock returns to calculate the expected…

A: Given DataStates of the economy: Recession, Normal, BoomSecurity Returns:Recession: −8% Normal: 13%…

Q: The returns on shares of Valley Transporter are predicted under the following various economic…

A: returnonstock=(−0.10+0.04+0.24)/3=0.06

Q: Suppose that Federal Reserve actions have caused an increase in the risk-free rate, rRF. Meanwhile,…

A: The objective of the question is to understand the impact of changes in the risk-free rate and the…