Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year. The second expects the return to be - 5%. The third predicts a return of 9%. The fourth expects a 1% return in the coming year. You are relatively confident that the return will be positive but not large, so you arbitrarily assign probabilities of being correct of 34%, 6%, 16%, and 44%, respectively, to the analysts' forecasts. Given these probabilities, what is Fluorine Chemical's expected return for the coming year? Fluorine Chemical's expected return for the coming year is (Round to two decimal places.)
Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year. The second expects the return to be - 5%. The third predicts a return of 9%. The fourth expects a 1% return in the coming year. You are relatively confident that the return will be positive but not large, so you arbitrarily assign probabilities of being correct of 34%, 6%, 16%, and 44%, respectively, to the analysts' forecasts. Given these probabilities, what is Fluorine Chemical's expected return for the coming year? Fluorine Chemical's expected return for the coming year is (Round to two decimal places.)
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
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Risk and return
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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.
Question
![lome
Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year. The second expects the return to be -5%. The third predicts a
return of 9%. The fourth expects a 1% return in the coming year. You are relatively confident that the return will be positive but not large, so you arbitrarily assign
probabilities of being correct of 34%, 6%, 16%, and 44%, respectively, to the analysts' forecasts. Given these probabilities, what is Fluorine Chemical's expected return
for the coming year?
nents
Fluorine Chemical's expected return for the coming year is
%. (Round to two decimal places.)
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Transcribed Image Text:lome
Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year. The second expects the return to be -5%. The third predicts a
return of 9%. The fourth expects a 1% return in the coming year. You are relatively confident that the return will be positive but not large, so you arbitrarily assign
probabilities of being correct of 34%, 6%, 16%, and 44%, respectively, to the analysts' forecasts. Given these probabilities, what is Fluorine Chemical's expected return
for the coming year?
nents
Fluorine Chemical's expected return for the coming year is
%. (Round to two decimal places.)
Plan
on eText
media Librai
ncial Calculat
pter Resource
Enter your answer in the answer box and then click Check Answer.
amic Study
dules
Check Answer
Clear All
All
showing
mmunication Tools >
This course (Introduction to Finance (EIN-101-DOnz1 Distance Spring 2021) is hased on 7urter/Smartr: Drincinles of Managerial Finance Brief Re
P Type here to search
insert
144
fs
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