Based on the following information, what is the standard deviation of returns? Probability of State of Economy Rate of Return if State of Economy State Occurs Recession .24 -.092 Normal .45 .107 Воom .31 .217

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: You have the following stock with expected returns given the different economic outcomes. What is…

A: The return that we expect from a stock is not guaranteed. The expected returns figure will vary…

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

A: A standard deviation (or  σ ) is a measure of how spread out the data is with respect to the mean.

Q: Use the following information to answer the two questions below. State of Prob. of the the economy…

A:

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

A: First, determine the expected value of the distribution using the formula E(X)=∑X⋅P(X) as shown…

Q: Consider the following information: Calculate the expected return. (Do not round intermediate…

A: Step 1: What is the expected return?The Expected Return measures the anticipated return on an…

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

A: State of economyProbabilityRate of return if state occursRecession0.39-0.13Bust0.610.25

Q: State of Economy Bust Boom Security Returns if Probability of State, State Occurs of Economy Roll…

A: It is difficult to arrive at a single accurate figure of the rate of return as it is affected by…

Q: Based on the following information, what is the standard deviation of returns? Rate of Return if…

A: Deviation = Return -expected returnSquared deviation = Deviation ^2Standard deviation = Variance…

Q: Stock W's standard coefficient of variance (CV) is Stock W’s Sharpe ratio assuming the risk-free is…

A: 1. Calculation of Stock W's Expected return and Standard Deviation State of Economy Probability…

Q: Consider the following information on Stocks I and II: State of Economy Recession Normal Irrational…

A: To solve the problem, we need to calculate the standard deviation of expected returns and beta for…

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

A: The expected return refers to the weighted average profits that the investment provides after…

Q: Given the following information, what is the standard deviation for this stock? Probability of state…

A: State of nature Probability (P) Rate of Return  ( R) Recession 0.12 0.19 Normal  0.75 0.11…

Q: State of Economy Bust Boom Probability of State of Economy Roll Ross .40 .60 -10% 21% 28 8 Calculate…

A: Expected return is the return expected with consideration of various factor that include the…

Q: Use the following returns for X and Y. Returns Year X Y 1. 21.8% 26.4% 2. -16.8 -3.8 3. 9.8 28.4 4.…

A: Here, Note: Here, we are considering the given data as a sample data, hence applying the formula of…

Q: A standard "money demand function used by macroeconomists has the form In(m)o +In(GDP) +R Where m is…

A:

Q: Bhupendra

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

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

A: Here,

Q: Consider the following information: State of Economy Boom Good Poor Bust Probability of State- of…

A: The weightage of each scenario's chance of occurrence together with the profit that could be…

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

A: Expected return refers to the rate of return that is earned by the investors over the investment…

Q: Assume you are given the following information regarding the expected returns for an asset, for…

A: Formulas used: Expected return = Sum of (Probability of state* Return in that state) Standard…

Q: Security Returns if State Occurs State of Economy Probability of State of Economy Roll Ross Bust .60…

A: There are two states of economy possible. Two different stocks have two different possible returns…

Q: Based on the following information, what is the standard deviation of returns? State of Economy…

A: The standard deviation shows the average volatility in the returns of the stock.It shows to what…

Q: Calculate :  M2 measure T2 measure Information Ratio (appraisal ratio) Fund  Average return…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub parts for…

Q: You are given the following information: ETT State of Economy State of Economy If State Occurs…

A:

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

A: Expected return = Sum of ( Rate of return x Probability of the return)=>Expected return =(Rate of…

Q: Probability of State of Economy State of Economy Recession .20 Normal .50 Boom .30 Iculate the…

A: Returns from stock investments depend on market conditions and the market conditions change due to…

Q: a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and…

A: Expected return refers to the return earn by an investor on the amount invested during a period of…

Q: Analysis of sales (the independent variable) to cash flows (the dependent variable) data for linear…

A: The slope indicates the changes in the dependant variable as we move along the dependant line. A…

Q: State of the Economy Recession Below Average Average Above Average Boom Mean Standard Deviation…

A: Honor Code: Since you have posted a question with multiple sub-parts, we will solve the first three…

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

A: The uncertainty or fluctuation of investment results is referred to as risk and investments with a…

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

A: Expected return is determined by weighing the potential outcomes of an investment against their…

Q: Consider the following information: State of Economy Boom Good Poor Bust Probability of State- of…

A: The standard deviation is the square root of variance. Calculating the expected return of a…

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: Expected return and standard deviation. Use the following information to answer the questions.…

A: Given:

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

A: State of economyProbability of state of economySecurity Return if state…

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: Consider the following information: Rate of Return if State Occurs State of Economy Probability of…

A:

Q: Stock W has the following returns for various states of the economy: State of the Economy…

A: Expected Return and Standard deviation of the Stock is determined using the below formula: Expected…

Q: Consider the following information: State of Economy Boom Good Poor Bust Probability of State- of…

A: Standard deviation refers to teh square root of variance that shows the average amount of the mean…

Q: What is the risk premium for the following returns if the risk-free rate is 4%? State Probability…

A:

Q: Following are three economic states, their likelihoods, and the potential returns: Return 32%…

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

Q: Return on Return on Asset K in Return on State of Probability Asset J in Asset L in Economy of State…

A: Expected return = sum of (probability * return)

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

A: Expected Return can be calculated as  Expected Return = Return x Probability

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.