A stock's returns have the following distribution: Demand for the Probability of This Rate of Return If Company's Products Demand Occurring This Demand Occurs Weak 0.1 (26%) Below average 0.1 (11) Average 0.4 18 Above average 0.3 27 Strong 0.1 52 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. onloulntionc R ound vour ans wers to two decimal places

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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answer each part CORRECTLY please!

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                                    | -26                                     |
| Below average                    | 0.1                                    | -11                                     |
| Average                          | 0.4                                    | 18                                      |
| Above average                    | 0.3                                    | 27                                      |
| Strong                           | 0.1                                    | 52                                      |
| **Total**                        | **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: _______
Transcribed Image Text: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 | -26 | | Below average | 0.1 | -11 | | Average | 0.4 | 18 | | Above average | 0.3 | 27 | | Strong | 0.1 | 52 | | **Total** | **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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