If the economy booms, RTF, Inc., stock is expected to return 11percent. If the economy goes into a recessionary period, then RTF isexpected to only return 2 percent, The probabilityof a boom is 74percent while the probability of a recession is 26 percent. What is13 the variance of the returns on RTF, Inc., stock?◄OU0.04330.001153C0.000748D 0.001558E 0.039477B

There are different possibilities in the economy and depending on the economy the company can earn…

Answered: only return 2 percent. The probability…

only return 2 percent. The probability of - percent while the probability of a recession is 26 perce 13 the variance of the returns on RTF, Inc., stock? A 0.0433 0.001153 0.000748 D 0.001558

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

Related questions

Q: What is the variance on a stock that has expected rate of return of 18% in a boom economy, 8% in a…

A: Variance is sum of [Probability*(Return-Mean)^2]

Q: Market condition Probability Return on A Good .10 8% Average day .80 10% Bad .10 -45% What is the…

A: To Find: Standard Deviation of A

Q: Consider a stock with value S = 50. Each period the stock moves up or down, independently, in…

A: Value of Stock = 50 Probability of upward trend that is 55= 0.7 Probability of Downward trend that…

Q: Stock W's standard coefficient of variance (CV) is Stock W’s Sharpe ratio assuming the risk-free is…

A: 1. Calculation of Stock W's Expected return and Standard Deviation State of Economy Probability…

Q: Consider the following information: Stock A Stock B Stock C State of Economy Boom Bust .14 .22 .40…

A: The financial condition that is expected to prevail in a country is known as the state of the…

Q: 8-8. What is the standard deviation of returns for the following stock? State Boom Normal Bust…

Q: ar Find the CAPM beta of the following stock, where Rg is stock return, R Is market return, Rg Is…

A: The Capital Asset Pricing Model is a model that describes the relationship between the expected…

Q: Refer to the table below: Expected return, E(R) Standard deviation, o Correlation 3 Doors, Inc. 17%…

A: A portfolio is created by collecting different classes of assets to minimum the risk associated with…

Q: Bdd

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

Q: Here are the percentage returns on two stocks. Digital Executive Fruit Cheese 178 Month January…

A: The standard deviation of returns is a statistical measure used to determine the risk associated…

Q: Consider the following information: Rate of Return If State Ocurs State of Probability of State of…

A: Introduction: The expected return of stock refers to the return that is anticipated on a stock. A…

Q: Expected Return, Variance, Std. Deviation and Cofficient of Variation: Magee Inc.'s manager believes…

A: The standard deviation of the stock is the measure of the deviation of the stock's return from the…

Q: b) Calculate the variance and standard deviation.

A: Calculation of expected return Probability Return Expected return A B C=A*B 30% -13% -3.90%…

Q: Consider the two (excess return) index-model regression results for stocks A and B. The risk-free…

A: Treynor measure = (RP-RF) / BETA.

Q: 5. You've observed the following returns on Crash-n-Burn Computer's stock over the past five years:…

A: Returns 6-8291616

Q: Refer to the table below: Expected return, E(R) Standard deviation, o Correlation 3 Doors, Inc.…

A: A minimum variance portfolio refers to the mix of investments that provides the lowest level of risk…

Q: Expected Return, Variance, Std. Deviation and Cofficient of Variation: Magee Inc.'s manager…

A: Formulas:

Q: stock's returns have the following distribution: emand for the Probability of This ompany's Products…

A: The stock's expected return is the return anticipates on investment by the investor, it can be in…

Q: A stock had returns of 14.43 percent, 18.87 percent, −14.99 percent, 12.39 percent, and 25.37…

A: Variance refers to the degree to which the return of a stock or asset vary over the time.

Q: Consider the following information: State of Economy Boom Good Poor Bust Probability of State- of…

A: The standard deviation is the square root of variance. Calculating the expected return of a…

Q: am. 134.

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

Q: Stock W has the following returns for various states of the economy: State of the Economy…

A: The expected return is the weighted average return that an investor will get for their investment.…

Q: Consider the following information: Probability of State- State of Economy of Economy Boom Good Poor…

A: Tabulate the data and then calculate the expected return of each stock by multiplying each stock…

Q: The returns on shares of Valley Transporter are predicted under the following various economic…

A: returnonstock=(−0.10+0.04+0.24)/3=0.06

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…

Q: If the economy booms, RTF, Incorporated, stock is expected to return 10 percent. If the economy goes…

A: To determine variance of the returns on RTF, Incorporated stock, the formula for the variance of a…

Q: Consider the following information: State of Economy Probability of State of Economy Boom Bust .68…

A: To calculate the variance of a portfolio, we first need to determine the expected return and…

Q: Over the past five years, a stock returned 8.3 percent, -32.5 percent, -2.2 percent, 46.9 percent,…

A: Formula for variance: σH2=∑t=1nRt-Rt¯2n-1Where,σH2= VarianceRt=Rate of ReturnR¯t=Rate of…

Q: The returns on shares of Valley Transporter are predicted under the following various economic…

A: Returns during recession: -0.11Returns during normal economy: 0.08Returns during boom:…

Q: Baghiben

A: The objective of the question is to calculate the expected return and standard deviation of the…

Q: If D, = S1.75, g (which is constant) = 3.6%, and P. =$40.00, what is the stock's expected total…

A: A model that helps to evaluate the value of the stock with the assumption that the dividend will…

Q: Consider the following information: Probability of State of State of Economy Boom Bust Economy 0.55…

A: The expected return on the portfolio of equal weights can be found by multiplying the returns of…

Q: Raghubhai

A: xa=((15%)^2-30%*15%*0.36)/((30%)^2+(15%)^2-2*30%*15%*0.36)=0.078652 Expected return==…

Question

If the economy booms, RTF, Inc., stock is expected to return 11
percent. If the economy goes into a recessionary period, then RTF is
expected to only return 2 percent, The probability
of a boom is 74
percent while the probability of a recession is 26 percent. What is
13 the variance of the returns on RTF, Inc., stock?
◄OU
0.0433
0.001153
C
0.000748
D 0.001558
E 0.039477
B

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define=expected return

VIEW

Step 2: Calculation of variance

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Consider the following returns and states of the economy for TZ.Com.: Economy ProbabilityReturn Weak 15% Normal 50% Strong 35% -9% 2% 6% What is the standard deviation of TZ's returns? SET YOUR CALCULATOR TO FOUR DECIMAL PLACES AND ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE %. FOR EXAMPLE, IF YOUR ANSWER IS 7.7011% ENTER IT AS 7.70.
E. 12.11% 2. North Around, Inc. stock is expected to return 22 percent in a boom, 13 percent in a normal economy, and -15 percent in a recession. The probabilities of a boom, normal economy, and recession are 6 percent, 92 percent, and 2 percent, respectively. What is the standard deviation on the returns of this stock? A. 011387 B. 000169 C.001506 D. 045318 E. 011561
Refer to the table below: 3 Doors, Inc. Down Co. Expected return, E(R) Standard deviation, o Correlation 15% 10% 30 18 0.39 Using the Information provided on the two stocks in the table above, find the expected return and standard deviation on the minimum variance portfolio. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return % Standard deviation %
None
6. The last four years of returns for a stock are as follows: Year Return 2 28.5% 1 - 4.2% a. What is the average annual return? b. What is the variance of the stock's returns? c. What is the standard deviation of the stock's returns? a. What is the average annual return? The average return is b. What is the variance of the stock's returns? The variance of the returns is 3 12.3% The standard deviation is %. (Round to two decimal places.) 3.6% c. What is the standard deviation of the stock's returns? (Round to five decimal places.) %. (Round to two decimal places.)
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.)
Yogesh
am. 151.
B O A stock had returns of 14.83 percent, 19.47 percent, -17.19 percent, 12.59 percent, and 27.07 percent for the past five years. What is t variance of the returns? O Multiple Choice 16891 .02853 .03804 .00378 .03424
Expected Return, Variance, Std. Deviation and Cofficient of Variation:Magee Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What's the standard deviation of the estimated returns?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 20% 24.15% Normal 50% 13.50% Recession 30% –13.30% Group of answer choices 15.68% 16.39% 14.26% 13.54% 10.69%

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