A stock's returns have the following distribution: Demand for the Company's Products Probability of this Demand Occurring Rate of Return if this Demand Occurs Weak 0.1 (24%) Below average 0.1 (14) Average 0.4 13 Above average 0.3 20 Strong 0.1 49 1.0 Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio:
A stock's returns have the following distribution: Demand for the Company's Products Probability of this Demand Occurring Rate of Return if this Demand Occurs Weak 0.1 (24%) Below average 0.1 (14) Average 0.4 13 Above average 0.3 20 Strong 0.1 49 1.0 Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: % Coefficient of variation: Sharpe ratio:
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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A stock's returns have the following distribution:
| Demand for the Company's Products |
Probability of this Demand Occurring |
this Demand Occurs |
| Weak | 0.1 | (24%) |
| Below average | 0.1 | (14) |
| Average | 0.4 | 13 |
| Above average | 0.3 | 20 |
| Strong | 0.1 | 49 |
| 1.0 |
Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of variation:
Sharpe ratio:
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