Given the following information, compute the standard deviation for Investment A: Payoff Probability 30% 0.6 15% 0.3 -12% 0.1 Group of answer choices a. None of these are correct b. 6% c. 9% d. 13%
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Given the following information, compute the standard deviation for Investment A:
Payoff Probability
30% 0.6
15% 0.3
-12% 0.1
Group of answer choices
a. None of these are correct
b. 6%
c. 9%
d. 13%
Step by step
Solved in 2 steps
- Consider the following investments: Investment Expected return Standard deviationA 5% 10%B 7% 11%C 6% 12%D 6% 10% Which would you prefer between the following pairs:a) A and Db) B and Cc) C and DComputing 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 periodThe standard deviation of return on investment a is 0.10, while the standard deviation of return on investment b is 0.04. If the correlation coefficient between the returns on A and B is_____________. A. -0.0447 B. -0.0020 C. 0.0020 D. 0.0447
- Let each decision variable, A, P, M, H, and G, represent the fraction or proportion of the total investment placed in each investment alternative. Max 0.073A + 0.103P + 0.064M + 0.075H + 0.045Gs.t. A + P + M + H + G = 1 0.5A + 0.5P - 0.5M - 0.5H <= 0 -0.5A - 0.5P + 0.5M + 0.5H <= 0 -0.25M - 0.25H + G >= 0 -0.6A + 0.4P >= 0 A, P, M, H, G <= 0 a. What fraction of the portfolio should be invested in each type of security (A, P, M, H, G)?b. How much should be invested in each type of security?c. What are the total earnings for the portfolio?d. What is the marginal rate of return on the portfolio? That is, how much more could be earned by investing one more dollar in the portfolio? *Please use excel solver & show all steps**1. If you perform a NPV analysis on a perspective investment using a "d" = 15% and: a. the NPV Is < 0, what can you tell me about the investment's IRR (time adjusted rate of return)? b. the NPV is > 0, what can you tell me about the investment's IRR (time adjusted rate of return)? c. the NPV is= 0, what can you tell me about the investment's IRR (time adjusted rate of return)? 2. We presume in Investment analysis that the payback method of evaluation is a better measure of.................than it is a measure of...................... We also think less of the payback method because it sometimes ignores the............., ..................of an investment since the................. the oftentimes occurs after the payback period has lapsed. 3. Please explain why we oftentimes equate EBITDA (earnings before subtracting] interest, taxes, depreciation & amortization) with NOI (net operating income) in examining business' profitability. Why don't…Supposing the return from an investment has the following probability distribution Return Probability R (%) 8 0.2 10 0.2 12 0.5 14 0.1 Required: What is the expected return of the investment? What is the risk as measured by the standard deviation of expected returns?
- Calculate the (a) expected return, (b) standard deviation, and (c) coefficient of variation for an investment with the following probability distribution: Probability Payoff 0.45 32.0% 0.35 -4.0% 0.20 -20.0%What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation (SDi), covariance (COVij), and asset weight (Wi) are as shown below? Asset (A) E(R₂) = 25% SDA = 18% WA = 0.75 COVA, B = -0.0009 Select one: A. 13.65% B. 20 U ODN 20.0% C. 18.64% D. 22.5% Asset (B) E(R₂) = 15% SDB = 11% WB = 0.25Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r, is 18.7%; and that the coefficient of variation, CV, is 1.88, answer the following questions: a. Find the standard deviation of returns, sigma Subscript rσr. b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence: (1) 68%, (2) 95%, (3) 99%.
- What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation (SDi), covariance (COVij), and asset weight (Wi) are as shown below? Asset (A) E(R₂) = 10% SDA = 8% WA = 0.25 COVAB = 0.006 Select one: A. 13.75% B. 7.72% C. 12.5% D. 8.79% Asset (B) E(RB) = 15% SDB = 9.5% WB = 0.75What are the (a) expected return, (b) standard deviation, and (c) coefficient of variation for an investment with the following probability distribution? Probability Payoff 0.2 19.0% 0.7 9.0 0.1 4.0On the basis of the utility formula below, which investment would you select if you were risk averse with A = 4? Investment Expected return E(r) Standard deviation σ 1 0.12 0.30 2 0.15 0.50 3 0.21 0.16 4 0.24 0.21