Market condition Probability Return on A Good .10 8% Average day .80 10% Bad .10 -45% What is the standard deviation of A? Enter your answer as a percentage to one decimal with no % sign.

Q: The probability distribution of returns of Stutson Gheegi Manufacturing is presented below. what is…

A: The standard deviation shows the average volatility in the returns of the stocks.The higher the…

Q: Consider the following information: Probability of State of Economy State of Economy Recession Boom…

A: Probability of Recession = 0.29Probability of Boom = 0.71Return under Recession = -0.09Return under…

Q: From the following table of returns, compute the arithmetic average return and compute the geometric…

A: From the following table of returns, compute the arithmetic average return and compute the geometric…

Q: State of Economy Bust Boom Probability of State of Economy 0.40 0.60 Security Returns if State…

A: Security return if state occursState of economyProbability of state of the…

Q: Use the information below to answer the question 52WHI 52WLo Ticker Div Yield % P/E Vol 00s High Low…

A: The Price-to-Earnings (P/E) ratio is a widely utilized financial metric that gauges a company's…

Q: Consider the three stocks in the following table. Pt represents price at time t, and ot represents…

A: The annualized rate of return is a standardized way of comparing the performance of investments with…

Q: 5 Consider the following information: Probability of Rate of Return if State Occurs Economy…

A: The expected return is the amount of return expected from the investment. Standard deviation is a…

Q: The following table,, shows the one-year return distribution of Startup, Inc. Calculate: a. The…

A: The expected return of the stock refers to the average benefits that the stock provides to the…

Q: State of Economy Bust Boom Probability of State of Economy Roll Ross .40 .60 -10% 21% 28 8 Calculate…

A: Expected return is the return expected with consideration of various factor that include the…

Q: An asset has an average return of 11.15 percent and a standard deviation of 23.91 percent. What is…

A: We make investments in a financial security with the hope of earning a return from the investment.…

Q: Bdd

A: Probability (z)=5%Annual return(r)=12%Standard deviation(sd)=41%Value of Z(5%) as per normal…

Q: State of Economy Probability of State of EconomyStock I Recession Normal Irrational exuberance.10…

A: Systematic risk is associated with uncontrollable risk factors, and its value is determined by Beta.…

Q: Security Returns if State Occurs State of Economy Probability of State of Economy Roll Ross Bust .60…

A: There are two states of economy possible. Two different stocks have two different possible returns…

Q: need help with both a and b

A: Given:x= 18%, -23%, 16%, 9%average(mean)= 10.3%n=5 yearsa. Let's find the total return: total…

Q: tate POOR NORMAL GOOD probability 40% 35% 25% Weight a .55 what is the weight of b what is the…

A: In the given case, we have provided the probability of each state of economy and its respective…

Q: Repeat the problem above, considering an inflation of 4.0%. How does inflation affect the results of…

A: Here, Purchase price = $25,000 Taking Discount: Discount = $2,000 No. of months = 48 months APR =…

Q: An asset has an average return of 11.15 percent and a standard deviation of 22.89 percent. What is…

A: Maximum rate of return depends on the probability of event and standard deviation and mean expected…

Q: Following are four economic states, their likelihoods, and the potential returns:   Economic State…

A: The expected return of a stock is the average return that the stock provides based on market…

Q: d. Assume the risk-free rate during this time was 4%. Calculate the Sharpe ratios for Bartman,…

A: Sharpe ratio = Return = D = DividendP1 = Price of current yearP0 = Price of previous yearTo…

Q: P8-1 Expected Return Given these three economic states, their likelihoods, ane potential returns,…

A: The expected return is the average return considering the different probabilities of different…

Q: Beta 0.53 Risk-free 0.7% MRP 5.55% Rate Given the data in the table, what is the stock's risk…

A: Risk free rate = 0.7% Market return = 5.55% Beta = 0.53

Q: If an investor requires a real return of 3% and the average inflation rate is 4%, what is the lowest…

A: Given:Real return = 3% = 0.03Inflation rate = 4% = 0.04

Q: Security A B C Beta 0.8 1.0 1.2 Expected Return 10% 12% 14% Residual standard deviation 25% 10% 20%…

A: According to Single Index model , Variance of stock is calculated as follows:-Variance of stock =…

Q: You've observed the following returns on Pine Computer's stock over the past five years: 8 percent,…

A: The mean return that any investment earns over time is recognized as average return of the stock or…

Q: An asset has an average return of 10.79 percent and a standard deviation of 22.71 percent. What is…

A: Maximum rate of return depends on the probability of event and standard deviation and mean expected…

Q: Assume CAPM is a correct model. Stock A's required rate of return is 12% and Stock B's required rate…

A: Stock -A Required rate of return is 12% Beta 1.2 Stock -B Required rate of return is 12% Beta 1.2…

Q: You have the following information: A B C 2% 3% 1.5 0.5 2 Alpha 1% Beta 2 D -2% Market 0% 1 Res.…

A: The performance of the portfolio can measure by using the 3 different methods as Sharpe ratio, the…

Q: 20. Assume you have the following table. If you know that the Risk free rate (rf) is 6%, what is the…

A: A ratio that provides information regarding the return of a security to the investor in comparison…

Q: Consider the following returns and states of the economy for Neptune Corporation: Economy…

A: Given: Economy Probability(P) Return Weak 40% 2% Normal 50% 13% Strong 10% 32%

Q: State of Economy Recession Normal Boom Probability of State of Economy 15 .56 .29 Stock A .06 .09 14…

A: The expected rate of return is the average amount of interest that investing in stock provides while…

Q: am. 134.

A: Step 1: Identify the formula for expected value of a probability distributionexpected value of a…

Q: A stock will have a loss of 11 percent in a bad economy, a return of 10.8 percent in a normal…

A: State of economyProbability (P)Return of stock (Rs)Bad0.32-11.00%Normal…

Q: Consider the following information: Rate of Return if State Occurs State of Economy Probability of…

A:

Q: Determine the standard deviation of the expected return. (Do not round intermediate calculations and…

A: To determine the standard deviation, we will first of all have to compute the expected return here.…

Q: the stock of Company J against the raw cent and a beta of 1.50. If the risk-free rate then determine…

A: Jensen's Alpha is a measure of a stock's risk-adjusted performance, which compares the stock's…

Q: Consider the following returns and states of the economy for TZ.Com.: Economy Probability Return…

A: The SD of the returns of a company refers to the spread of the returns around the average returns of…

Q: Consider the following data. Period 1 2 3 4 Rate of Return (%) - 5.8 - 8.0 - 3.8 2.0 5 5.2 What is…

A: formula for growth rate = ((y2-y1)/y1)*100

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

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.