Exponential Regression The table below shows the value, V, of an investment (in dollars) after n years. 3 12 14 19 V(n) 4600 5678.78 7883.59 11931.09 13511.09 18859.61 Use your calculator to determine the exponential regression equation that models the set of data above. Round the "a" value to two decimals, and round the "b" value to three decimals. Use the indicated variables and proper function notation. V(n) = Based on the your regression model, what is the percent increase per year? Find V(15). Round your answer to two decimal places. V(15) = %3D Interpret your answer by completing the following sentence. Be sure to use units in your answer. is "The value of the investment after

Exponential Regression The table below shows the value, V, of an investment (in dollars) after n years. 3 12 14 19 V(n) 4600 5678.78 7883.59 11931.09 13511.09 18859.61 Use your calculator to determine the exponential regression equation that models the set of data above. Round the "a" value to two decimals, and round the "b" value to three decimals. Use the indicated variables and proper function notation. V(n) = Based on the your regression model, what is the percent increase per year? Find V(15). Round your answer to two decimal places. V(15) = %3D Interpret your answer by completing the following sentence. Be sure to use units in your answer. is "The value of the investment after

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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Consider an investment with the following probability distribution: Probability: Payoff: 0.40 41.0% 0.40 -6.0 0.20 -20.0 Calculate the expected return. Do not round intermediate calculations. Round your answer to two decimal places. _____% Calculate the standard deviation. Do not round intermediate calculations. Round your answer to two decimal places. _____% Calculate the coefficient of variation. Do not round intermediate calculations. Round your answer to two decimal places. _____
es Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.7 percent and the standard deviation was 18.3 percent. a. What is the probability that your return on this asset will be less than -4.1 percent in a given year? Use the NORMDIST function in Excel® to answer this question. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What range of returns would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter…
Determine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Determine the present value of the following single amounts. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. 2. 3. 4. Future Amount $ 25,000 $ 19,000 $ 30,000 $ 45,000 ¡= 6% 10% 12% 11% n = 11 14 29 10 Present Value
uppose the average return on Asset A is 7.1 percent and the standard deviation is 8.3 percent, and the average return and standard deviation on Asset B are 4.2 percent and 3.6 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to answer the following questions. a. What is the probability that in any given year, the return on Asset A will be greater than 12 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the probability that in any given year, the return on Asset B will be greater than 12 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. In a particular year, the return on Asset A was −4.38 percent. How likely is it that such a low return will recur at some point in the future? (Do not round…
Which of the following statements regarding standard deviation is TRUE: Group of answer choices A measure of the dispersion of a random variable The annualised volatility The square root of volatility Always expressed in %
Question 1 Are the following statements true or false? Provide a short justification for your answer. (You are evaluated on your justification.) Remember that a statement is false if any part of the statement is false. A single correct counterexample is sufficient to show that a statement is false. a) assets A, B, C, with expected returns and standard deviations: Suppose you are a mean-variance optimizer. The risk-free rate is 3%. There are three risky E [řa] = 10%, SD [FA] = 5% E [řB] = 15%, SD [řB] = 7% E [řc] = 12%, SD [řc] = 9% You cannot invest in all three risky assets. Instead, you have to choose whether to invest in only assets (A, B), or only assets (A, C). Asset B mean-variance dominates asset C, since it has higher return and lower standard deviation than asset C. Thus, as long as you are risk-averse, you would always prefer the set of assets (A, B) to the set assets (A, C). b) the same market B's. The covariance matrix between A, B, C is: Suppose the CAPM holds. Consider…
Computing Present and Future Values Under Different Assumptions Determine the unknown variables in each of the four separate investment scenarios. Round the RATE to one percentage point (for example, enter 8.5 for 8.54444%). Round NPER, PV, and PMT to the nearest whole number. Use a negative sign only for an amount related to PMT. Investment 1 Investment 2 Investment 3 Investment 4 RATE Answer 7% 6% 1% NPER 10 Answer 4 24 PV $216,000 $9,000 Answer $21,600 PMT $(35,000) $(2,300) $(16,200) Answer TYPE End of period Beg. of period End of period Beg. of period
Question IV: Suppose S =$100, K =$95, r =8% (continuously compounded), t =1, o =30%, and 8=5%. Use an eight- period lognormal binomial tree to answer the following questions. You can also use Excel for this question. If you do so, please upload the Excel file separately with the detailed calculations. (a) Construct the stock tree. (b) Compute the prices of an European call option. (c) Compute the prices of an American put option.
Use the data shown in the following table: K a. Compute the average return for each of the assets from 1929 to 1940 (the Great Depression). b. Compute the variance and standard deviation for each of the assets from 1929 to 1940. c. Which asset was the riskiest during the Great Depression? How does that fit with your intuition? Note: For all your answers type decimal equivalents. Data table Year 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 S&P 500 -0.08906 -0.25256 - 0.43861 -0.08854 0.52880 -0.02341 0.47221 0.32796 -0.35258 0.33204 -0.00914 - 0.10078 Small Stocks - 0.43081 -0.44698 -0.54676 -0.00471 2.16138 0.57195 0.69112 0.70023 - 0.56131 0.08928 0.04327 -0.28063 Corp. Bonds 0.04320 0.06343 -0.02380 0.12199 0.05255 0.09728 0.06860 0.06219 0.02546 0.04357 0.04247 0.04512 World Portfolio -0.07692 -0.22574 -0.39305 0.03030 0.66449 0.02552 0.22782 0.19283 -0.16950 0.05614 -0.01441 0.03528 Treasury Bills 0.04471 0.02266 0.01153 0.00882 0.00516 0.00265 0.00171 0.00173…
n is the number of periods of an investment, PV is the starting value, FVn is the future value n periods ahead, and ^ means 'to the power of'. What is the correct formula for calculating return? a)(PV/FVn)^n - 1 b)(FVn/PV)^n c)1 - (FVn/PV)^n d)(FVn/PV)^n - 1
When looking at an assets VaR (5%, normal), what are we discussing? (a) A 5% confidence interval of returns centered on the mean (b) The average 95th-100th percentile of possible returns (c) The average 0th - 5th percentile of possible returns (d) The 5th percentile of possible returns (e) The 95th percentile of possible returns
Mean and Variance of Discrete Random Variable and the Characteristics of Normal Random Variable Example 1: Suppose that you are given the option of two investment portfolios, A and B, with potential profits and the associated probabilities displayed below. PORTFOLIO A Profit X -2,000 -4,000 3,000 5,000 PROBABILITY P(x) 0.3 0.1 0.3 0.3 PORTFOLIO B Profit X -3,000 -2,000 4,000 5,000 Probability P(X) 0.2 0.2 0.4 0.2 Calculated Mean and Standard Deviation for Portrollo A: Mean = 1,400 and standard deviation = 3,322.65 Calculated Mean and Standard Deviation for Portrollo B: Mean=1,600 and standard deviation= 3,882.31 A. using the mean and variance of portfolio A, interpret the result B.Based on the expected profits, which portfolio will you choose?

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