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 (22%) Below average 0.2 (13) Average 0.3 17 Above average 0.3 39 Strong 0.1 64 1.0 Assume the risk-free rate is 2%. 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 (22%) Below average 0.2 (13) Average 0.3 17 Above average 0.3 39 Strong 0.1 64 1.0 Assume the risk-free rate is 2%. 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:
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 1P
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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 | (22%) |
Below average | 0.2 | (13) |
Average | 0.3 | 17 |
Above average | 0.3 | 39 |
Strong | 0.1 | 64 |
1.0 |
Assume the risk-free rate is 2%. 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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