Malone Imports stock should return 12 percent in a boom, 10 percent in a normal economy, and 2 percent in a recession. The probabilities of a boom, normal economy, and recession are 5 percent, 85 percent, and 10 percent, respectively. What is the variance of the returns on this stock? Multiple Choice O O .015254 .000522 .006107 024718 .000611

Malone Imports stock should return 12 percent in a boom, 10 percent in a normal economy, and 2 percent in a recession. The probabilities of a boom, normal economy, and recession are 5 percent, 85 percent, and 10 percent, respectively. What is the variance of the returns on this stock? Multiple Choice O O .015254 .000522 .006107 024718 .000611

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

A stock's returns have the following distribution: Demand for the company's probability of this demand product occurring weak below average average above average strong 10% 10% 30% 30% 20% Rate of return if this demand occurs -30% -14% 11% 20% 45% Assume the risk-free rate is 2.8%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. exp return =13.90%, std dev=21.86%, CV=1.57, and sharpe ratio =0.54 exp return = 13.90%, std dev=21.86%, CV=0.57, and sharpe ratio =0.54 exp return = 13.90%, std dev=21.86%, CV=1.57, and sharpe ratio =0.51 exp return =3.90%, std dev=11.86%, CV=2.57, and sharpe ratio =0.59
Consider 2 scenarios: Boom Economy and Normal Economy. The Boom economy has 20% chance of happening, while Normal economy has 80% chance of happening. For each scenario (Boom and Normal), stock ABC has a return of 25%, and 4%, respectively; stock XYZ has a return of 10% and 6.5%, respectively; the market portfolio has a return of 12% and 5% respectively. 1) Calculate Expected return, Variance and Standard deviation for stock ABC and XYZ 2) Based on your results in part (1), can you decide which stock to invest?3) Calculate Beta for stock ABC and XYZ 4) If the T-bill rate is 3%, what does the CAPM say about the fair expected rate of return on the two stocks? How does this result influence your investment decision?
The returns on shares of Valley Transporter are predicted under the following various economic conditions: Recession -0.11 Normal +0.08 Boom +0.25 If each economy state has the same probability of occurring (33.33%), what is the variance of the stock?
You decide to invest in a portfolio consisting of 20 percent Stock A, 52 percent Stock B, and the remainder in Stock C. Based on the following information, what is the variance of your portfolio? State of Economy Probability of State of Economy Return if State Occurs Stock A Stock B Stock C Recession .119-10.60% -4.00 % -13.00% Normal.675 9.90 % 10.76 % 17.40% Boom .206 21.65 % 25.31% 30.01% Multiple Choice .00861.00801.01162.00973.00904
A stock will have a loss of 10.6 percent in a bad economy, a return of 10.4 percent in a normal economy, and a return of 24.3 percent in a hot economy. There is 28 percent probability of a bad economy, 41 percent probability of a normal economy, and 31 percent probability of a hot economy. What is the variance of the stock's returns?
This question assumes the standard mean-variance utility function. You are allocating your investments between a the NZX50 and a holding of (New Zealand) T-bills. The expected return on the NZX50 is 7.50%, with volatility 12.80%. In contrast, there is no risk investing in T-bills, and they will earn you a return of 4.70%. Your risk-aversion is 7. What percentage of your wealth should you allocate to Treasury bills? 34.61% 96.88% 96.51% 75.59%
Consider the following information: Probability of State of State of Economy Boom Bust Economy 0.55 8.45 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate Round the final answer to 2 decimal places.) Expected return Variance Rate of Return if State Occurs Stock A Stock B Stock C 0.06 0.14 0.34 0.10 0.02 -0.07 10.65% b. What is the variance of a portfolio invested 25% each in A and B and 50% in C? (Do not round intermediate calc the final answer to 6 decimal places.)
The stock price of Company XYZ can only have 5 possible stock price (PhP 10, PhP20, PhP30, PhP40 and PhP50) and each price is equally likely to happen. Determine the expected stock price and the variance of price outcomes.
None
None
Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock C Boom .14 Bust .16 a. b. Stock B .58 .42 .22.40 .06-.05 What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.)
Consider the following information: Probability of State of State of Economy Book Bust Economy 0.55 Variance Rate of Return if State Occurs Stock A Stock B 0.06 0.14 0.10 0.02 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediat Round the final answer to 2 decimal places.) Expected return b. What is the variance of a portfolio invested 25% each in A and B and 50% in C? (Do not round intermediate calc the final answer to 6 decimal places.) 10.65% Stock C 0.34 -0.07

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

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

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