Self-Test ProblemGiven are the following possible dollar returns (dividends plus capital gains) over thecoming year from a $10,000 investment in General Motors common stock:State of EconomyProbability0.200.60Return$-1,0001,5002,500RecessionNormal yearBoom0.20Convert the dollar returns to percentage returns and then determine thea. Expected returnb. Standard deviation of returns

Percentage return in recession (R1) = -1000/10000 = -10% Percentage return in normal year (R2) =…

Answered: Given are the following possible dollar…

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

See similar textbooks

Similar questions

Manshuk
can you help me with question b please
Mansukh
How is this set-up to solve? Ford Stock I) & II) were in previous question GM stock produced the following monthly returns (January - May): 5%, 8%, -2%, 12%, and 15%. Ford stock produced the following monthly returns (January - May): 1%, 10%, 6%, 3%, and 2%. I) Calculate the average return for each stock. II) Calculate the standard deviation of monthly return for each stock. III) Calculate the correlation coefficient between GM and Ford stocks.
Felix is estimating the return for Togo Sledding and has determined the following probabilities and expected returns. Togo's expected return is closest to: Expected Probability Return Roaring expansion Steady high growth Steady moderate growth Slowing Recession 9% 17% 11% 14% 15% 8% 42% 3% 23% -5%
Ten annual returns are listed in the following table: - 19.1% 16.8% 18.3% - 49.8% Click on the following icon to copy the data into a 43.3% spreadsheet.() 1.2% a. The arithmetic average return over the 10-year period is - 16.2% a. What is the arithmetic average return over the 10-year period? b. What is the geometric average return over the 10-year period? c. If you invested $100 at the beginning, how much would you have at the end? 45.7% (Round to four decimal places.) 44.7% 3.9%
Nikul
Suppose you invest 70% of your fund in stock A and the other 30% in stock B. If stock A and B are expected to have the following returns next year, then what are the standard deviations for Stock A, Stock B and the portfolio returns respectively? Probability State of Economy Recession Boom 9.60%; 11.6% 12.60%; 14.2% 2.60%; 14.05% 9.60%; 7.80% .2 .8 Stock A -9% 18% Stock B 1% 3%
The table given below reports last five years data on annual rates of return (HPYS) on two stocks Year Stock A (%) Stock B (%) 1 16 -10 24 40 30 10 5 -20 20 pre 3. Compute the coefficient of variation for each stock. By this measure which stock is preferable.
Current price of Company X's stock is $100. The table below gives the data on end of the year prices and probabilities dependent on the state of the economy. Calculate the expected return for the stock. (E) Economy Probability End of the year price Growth .5 $130 Recession .5 $90 O a. 25% b. 10% O c. 15% O d. 20%
Given the following historical returns, calculate the average return and the standard deviation: Year Return 1 14% 2 10% 3 15% 4 11%
The table given below reports last five years data on annual rates of return (HPYS) on two stocks Year Stock A (%) Stock B (%) 1 16 -10 24 40 30 10 5 -20 20 2. Compute the standard deviation for each stock. Which stock is preferable by this measure measure

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS