Which of the following statement(s) is(are) true?1) The real rate of interest is determined by the supply and demand for funds.II) The real rate of interest is determined by the expected rate of inflation.III) The real rate of interest is unaffected by actions of the Fed.IV) The real rate of interest is equal to the nominal interest rate plus the expected rate of inflation.III and IV only.I only.OII and III only.O, II, III, and IV only.OI and III only. Consider the following probability distribution for stocks A and B:State Probability Return on Stock A Return on Stock B10.1010%8%27%36%9%8%13.2%; 9%The expected rates of return of stocks A and B are and14%; 10%O7.7%; 13.2%0.200.200.300.2013.2%; 7.7%13%12%14%15%respectively.

It is a problem that discusses the real interest rate and the factors that affect interest rates.

Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.10 10% 8% 2 13% 7% 12% 6% 14% 9⁰ 15% 8% 5 0.20 0.20 0.30 0.20 The expected rates of return of stocks A and B are______ and respectively.

Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.10 10% 8% 2 13% 7% 12% 6% 14% 9⁰ 15% 8% 5 0.20 0.20 0.30 0.20 The expected rates of return of stocks A and B are______ and respectively.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Which of the following statement(s) is(are) true?
1) The real rate of interest is determined by the supply and demand for funds.
II) The real rate of interest is determined by the expected rate of inflation.
III) The real rate of interest is unaffected by actions of the Fed.
IV) The real rate of interest is equal to the nominal interest rate plus the expected rate of inflation.
III and IV only.
I only.
OII and III only.
O, II, III, and IV only.
OI and III only.

Consider the following probability distribution for stocks A and B:
State Probability Return on Stock A Return on Stock B
1
0.10
10%
8%
2
7%
3
6%
9%
8%
13.2%; 9%
The expected rates of return of stocks A and B are and
14%; 10%
O7.7%; 13.2%
0.20
0.20
0.30
0.20
13.2%; 7.7%
13%
12%
14%
15%
respectively.

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The stock market can have three potential returns with the following probabilities. Note "otherwise" is whatever probability it takes for all three probabilities to sum to one. So, if the first two probabilities are each .30, then "otherwise" represents a probability of .40. Probability Return -0.04 0.24 0.38 otherwise 0.00 0.18 What is the stock market's standard deviation? Enter your answer in decimal form, and show 4 decimal places.
Stocks A and B have the following returns: (Click on the folowing icon a in order to copy its contents into a spreadsheet.) Stock A Stock B 0.08 0.06 0.15 0.05 0.04 0.05 0.01 -0.01 0.09 -0.03 a. What are the expected roturns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 048, what is the expected return and standard deviation of a portfolio of 75% stock A and 25% stock B? a. What are the expected returns of the two stocks? The expected return for stock A is (Round to three decimal places.)
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Consider the following probability distribution for stocks A and B: Table 4 Probability Distribution for Stocks A and B State Probability Return on Stock A Return on Stock B 1 0.1 10% 8% 2 0.2 13% 7% 3 0.2 12% 6% 4 0.3 14% 9% 5 0.2 15% 8% The variances of Stocks A and B are _____ and _____, respectively. Group of answer choices .015%; .019% .022%; .012% .032%; .02% .015%; .011% .014%; .021%
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