Consider the following information: Probability of State of Portfolio Return if State State of Economy Economy Occurs Recession .20 -13 Вoom .80 19 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

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

A: Probability of Recession = 0.29Probability of Boom = 0.71Return under Recession = -0.09Return under…

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: Consider the following information: State of Economy Boom Bust Probability of State of Economy .58…

A: A portfolio is an assortment of monetary assets that an individual or organization owns. The…

Q: . What are the expected rate of return and standard deviation of the portfolio? (Do not round…

A: A portfolio is a collection of different type of investments or financial assets or financial…

Q: Consider the following information: State of Economy Probability of State of Economy Boom Bust .67…

A:

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

A: Expected return is defined as the sum of returns multiplied with respective probabilities. Where as…

Q: Return on Asset D in State Return on Asset E in State Return on Asset F in State Boom 0.35 0.060…

A: Standard deviation of a security is a measure of risk of a security which denotes the variation in…

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: Bhupendra

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

Q: If the expected rate of inflation was 3% and the actual rate was 6.2%; the systematic response…

A: Security return is calculated by subtracting the initial price from the final price of the security…

Q: State of Economy Recession Normal Irrational exuberance Probability of State of Economy .30 .45 .25…

A: State Recession probability = 0.3State Normal probability = 0.45State Irrational exuberance…

Q: Consider the following information: State of Probability of Economy State of Economy .20 .40 .30 .10…

A: Weight of Stock A = 0.31Weight of Stock B = 0.38Weight of Stock C = 0.31Expected Return during Boom…

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: State of Economy Bust Boom State of Economy Probability of State of Economy 0.50 0.50 Bust Boom…

A: Expected return in finance is a fundamental concept representing the anticipated gains or losses on…

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

A: Solution:

Q: Consider the following information: State of Economy Probability of State of Economy Boom Bust .73…

A: Return on an investment is the total income that an investor can earn on their investment in both…

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: 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: Consider the following information:   State of Economy Probability of State of Economy Rate of…

A: Expected Return: It represents the amount of loss or profit expected by the investor from an…

Q: Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20…

A: Scenario Probability Stocks Bonds Recession0.2-5%19%Normal economy 0.620%10%Boom 0.227%4%

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

A: The expected return using probabilities is calculated using following equation Expected return =…

Q: None

A: Step 1: Initial Scenario:State of Economy:Fast growth: 0.11 probability, 35% returnSlow growth: 0.50…

Q: State of Economy Probability of State of Economy Rate of Return if State Occurs   Recession .21…

A: Expected return = 0.21*-13% + 0.49*15% + 0.30*34%

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: Consider the following scenario analysis:-   State of Economy Probability Stocks Bonds Recession…

A: Corporate finance is referred as the decision of the firm to take capital investments and other…

Q: Q2.a. Consider the following scenario analysis.< Scenario Probability Recession Normal Boom 0.20…

A: STEP 1 The positive square root of the variance is the standard deviation. One of the fundamental…

Q: Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return…

A: Scenario Analysis Explained Step-by-StepThis analysis helps us understand the potential performance…

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: 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: Compute the expected return given these three economic states, their likelihoods, and the potential…

A: The expected return on a security or asset is given by: Expected return (Er) = Sum of (Probability *…

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

A:

Q: An investor is considering the purchase of Gryphon stock, which has returns given in the table…

A: The expected return of the stock refers to the weighted average of the observed returns to find the…

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: 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.