Answered: Calculate the expected value of X,…

Calculate the expected value of X, E(X), for the given probability distribution. x −20 −10 0 10 20 40 P(X = x) 0.2 0.1 0.2 0.1 0 0.4 E(X) =

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 2QTD

See similar textbooks

Related questions

Q: What is the probability of generating a random number between 0.25 and 0.85 (to 1 decimals)?

A: As per uniform density function, Probability is determined based on uniform basis.

Q: Consider the following data: x 6 7 8 9 10 P(X = x) 0.1 0.3 0.1 0.1 0.4 Step 1 of 5: Find the…

A: The objective of the question is to calculate the expected value of a random variable X. The…

Q: here μ, a>0 and (et) is a time series of independent and identically distributed tandard Gaussian…

A: The given stochastic process is defined by:Xt=Xt−1⋅exp(μ+σεt)where μ and σ>0 are constants,…

Q: 4. Given the probability and returns associated with each state, what is the expected return? What…

A: Calculations of expected return and standard deviation: Excel workings:

Q: Complete the table below using CAPM model…

A: Given: Risk free rate = 10% Market rate = 18% Beta = 0.8

Q: Consider the following two securities X and Y. Security Return Standard Deviation X 20.0% Y 10.0%…

A: Systematic risk is the market risk which is non-diversifiable in nature. It applies to all the firms…

Q: Given the following probability distribution, what is the standard deviation of returns for Security…

A: standard deviation of security is computed by following formula:-standard deviation of security =…

Q: Based on the following probability distribution, what is the security’s expected return? State…

A: Calculate the expected return as follows: Expected return = Sum of product of (Probability *…

Q: Given the following probability distribution, what is the standard deviation of returns for Security…

A: Mean= Σ [xi*P(xi)]Standard deviation =sqrt(Σ (xi - x̄)^2*P(xi))

Q: 4. Calculate the sharpe ratio for security A. 1. 0.67 2. 0.92 3. 0.75 4. 0.18

A: Risk free rate is 7%

Q: What is the Variance of returns for Security XYZ? (no rounding off until the final answer, final…

A: Information OUTCOME PROBABILITY EXPECTED RETURN A 20% 20% B 80% 25%

Q: Can you explain, when calculating the mean why the probability is included in the calculation? eg…

A: In the financial world, two terms are widely used: i) Ex-ante and ii) Ex-post i) Ex-ante which means…

Q: What is the standard deviation of a random variable q with the following probability distribution?…

A: Standard deviation is a statistical measure that indicates how much the data in a set deviates or…

Q: Problem 4. Consider two scenarios, wi with probability and wa with probability Suppose that the…

A: Here, w1 is 1/4 or 25% w2 is 1/4 or 75% K1w1 of first security is -2% K1w2 of first security is 6%…

Q: Nadine entered into a four-year interest rate swap two years ago with a level annual notional amount…

A: Annual notional amount = 10000 Fixed interest rate = 3.4% Time period remaining = 2 Years

Q: Calculate the expected value of the scenario. X₁ P(x₁) -$0.25 0.1 SO 0.5 $0.25 0.1 $0.50 0.3

A: Xi P(Xi) $ -0.25 0.1 $ - 0.5 $ 0.25 0.1 $…

Q: Example 3 ss oont alaft A Following Example 2, consider a porfolio with three assets S1, S2 and S3…

A: Note: This post has three subparts. The second part contains a reference to an optimal portfolio…

Q: Prob. Return (%) B 0.1 40 G 0.2 30 O 0.3 15 L 0.2 2 S 0.2 -12 where B-Bloom,G-Good,…

A: Risk is a factor which arises due to the possibility of differences between the actual outcome and…

Q: 3. Security A has the following probability distribution of returns: Scenario Probability Return 0.1…

A: Calculation: Formula snip:

Q: The beta of the risk-free asset is: 0.5 0.5 1.0 -1.0 2.0

A: In this question we need to tell the value of beta of risk free asset.

Q: Two sets of security X and Y have the following characteristics. Security X Probability Return…

A: expected return = ∑npn×rn where, n = number of scenario p = probability r= return standard…

Q: Given the following probability distribution, what are the expected return and the standard…

A: The expected return is the return expected from the investment made. The expected return in this…

Q: If i 2%, the value of X in the following CFD is nearest to: !! 10 10 10 10 20 20 20 20

A: Future value of annuity: The future value of an annuity is a method of determining how much money a…

Q: 6-5. (Standard deviation) Given the following prot Nasional Berhad, find the standard deviation.…

A: The standard deviation is a tool that dictates that how much variance between the average and actual…

Q: You are given the following possible returns for Security J. Given this information, determine the…

A: The coefficient of variation (CV) is a statistical measure that compares the standard deviation of a…

Q: Given the following probability distribution, what is the standard deviation of returns for Security…

A: The standard deviation of the stock or security helps us know the risk level of the stock. A higher…

Q: Given the following probability and the standard deviation of returns for Security J? The answer…

A: A statistical measure that represents the variation in the return on the stock is term as the…

Q: Given the following probability distributions, what are the expected returns for the Market and for…

A: We will calculate probability weighted return for both the returns i.e. market return and security J…

Q: Given the following probability distribution of returns: Probability Return 0.1 -15.0%…

A: Probability Return 0.1 -15.00% 0.25 0.00% 0.3 8.50% 0.25 12.00% 0.1 32.00%

Q: Consider the probability distribution p(s) of the returns rA and rB of two securities A and B: state…

A: Covariance measures the degree of relativeness between the two or more securities present in a…

Question

Calculate the expected value of X, E(X), for the given probability distribution.

x	−20	−10	0	10	20	40
P(X = x)	0.2	0.1	0.2	0.1	0	0.4

E(X) =

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

4. Given the probability and returns associated with each state, what is the expected return? What is the standard deviation? Probability Return 0.1 -0.5 0.2 -0.05 0.4 0.16 0.2 0.25 0.1 0.6
You are given the following possible returns for Security J. Given this information, determine the coefficient of variation for Security J State Probability G 1 30% 10% 25% 18% 14% 24% 27% 2 3 4 O 0.3907 O 0.3847 O 0.3721 O 0.4040 00.3597 31%
Given the following probability distribution, what is the expected return and the standard deviation of returns for Security J? The answer choice lists expected return and standard deviation in the respective order. State 1 2 3 Pri 0.2 O 12%; 5.18% O 15%; 3.16% O 15%; 6.50% 0.6 0.2 O 20%; 5.00% 15%; 10.00% rj 10% 15 20
Based on the following probability distribution, what is the security’s expected return? State Probability r 1 0.2 –5.0% 2 0.4 10.0 3 0.4 30.0
If i 2%, the value of X in the following CFD is nearest to: 10 10 10 10 20 20 20 20
Given the following probability distribution of returns: Probability Return 0.1 -15.0% 0.25 0.0% 0.3 8.5% 0.25 12.0% 0.1 32.0% what is the expected return?
Given the following probability distribution, what is the standard deviation of returns for Security J? (Expresss your answer in percentage, but do not include the percent sign, %, i.e., 4.65) State Pi rJ 1 0.2 6 % 2 0.6 11 3 0.2 17
Two sets of security X and Y have the following characteristics. Security X Probability Return Securty Y Probability Return 0.1 30% 0.5 -20% 0.2 20% 0.25 10% 0.4 10% 0.30 20% 0.2 05% 0.30 30% 0.1 -10% 0.10 40% Required. Calculate the expected return for each Security. Calculate the standard deviation for each security.
Boom Nasional Berhad, find the standard deviation. PROBABILITY RETURN 0.35 8% 0.20 3% 0.20 20% 025 15%
The following table provides a probability distribution for the random variable y. a. Compute E(y). b. Compute Var(y) and .
The random variable x is known to be uniformly distributed between 10 and 20. a. Show the graph of the probability density function. b. Compute P(x15). c. Compute P(12x18) d. Compute E(x) e. Compute Var(x)
Given the following probability distribution, what are the expected return and the standard deviation of returns for Security J? State Pi ri 1 0.5 11% 2 0.3 8% 3 0.2 5% O 9.40%; 2.04% O 8.90%; 2.34% O 7.40%; 2.94% O 8.40%; 2.64% O 7.90%; 1.74%