Can you please answer and kindly show detailed human working. Question 1: 8 marksThe following data are available about the returns of two stocks andmarket portfolio:Economic State ProbabilityStock A (%)Stock B (%)Market portfolio (%)Deep Recession0.05-3-2-13Mild Recession0.20691Average0.50111215Mild Boom0.20141529Strong Boom0.05192643Table 1You are required to:a) Compute the expected return for stocks A and B (2 marks)b) Compute the standard deviation for stocks A and B. Which stockis riskier? (3 marks)c) Compute the expected return of a portfolio that comprises of 70%stock A and 30% stock B (1 mark)d) Compute the standard deviation of returns for the marketportfolio (1 mark)e) Which, among stocks A, B and the market is riskier? Respond inlight of your computations (1 mark)

Answered: Image /qna-images/answer/1312c3a9-6640-4bcb-a596-ef3e10251430.jpg

Answered: Question 1: 8 marks The following data…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter5: Financial Options

Section: Chapter Questions

Problem 3Q

See similar textbooks

Similar questions

Please Answer the following
Question 1 Suppose you have the following expectations about the market condition and the returns on Stocks X and Y. Market Condition Probability Return on Stock X Return on Stock Y Bear Market 0.3 -3% -5% Normal Market 0.5 3% 5% Bull Market 0.2 8% 15% a) What are the expected returns for Stocks X and Y, E(rX) and E(rY)? b) What are the standard deviations of the returns for Stocks X and Y, σX and σY?
Solve for no. 3 only
Question 1 Refer to the following observations for stock A and the market portfolio in the table:Month Stock A Market portfolio1 0.30 0.122 0.24 0.083 -0.04 -0.104 0.10 -0.025 0.06 0.086 0.10 0.07 a) Calculate the main statistic measures to explain the relationship between stock A and the market portfolio:• The sample covariance between rate of return for the stock A and the market;• The sample Beta factor of stock A;• The sample correlation coefficient between the rates of return of the stock A and the market
1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market using the information from the table (performance): Year X Market 1 -7 7 2 -11 15 3 21 20 4 15 17 5 8 10 6 9 7 7 -2 -1
Directions: Compute the returns, average of returns and standard deviation of the following stocks and the PSEI. 1. 2. AGI SM Year Stock Return x x (x--x)² Year Stock Return x x (x-x)² Price Price 30/1/2014 27.100 30/1/2014 704.500 28/2/2014 30.000 28/2/2014 694.000 31/3/2014 28.500 31/3/2014 705.000 30/4/2014 31.150 30/4/2014 725.000 30/5/2014 29.650 30/5/2014 786.000 30/6/2014 29.100 30/6/2014 816.000 31/7/2014 26.350 31/7/2014 797.000 29/8/2014 24.600 29/8/2014 772.000 30/9/2014 26.000 30/9/2014 803.500 31/10/2014 25.300 31/10/2014 783.500 28/11/2014 24.800 28/11/2014 804.500 29/12/2014 22.550 29/12/2014 815.000 PSEI Year Stock Return x X (x-X)? 30/6/2014 6,844.31 Price 31/7/2014 6,864.82 30/1/2014 6,041.19 29/8/2014 7,050.89 3. 28/2/2014 6,424.99 30/9/2014 7,283.07 31/10/2014 7,215.73 31/3/2014 6,428.71 28/11/2014 7,294.38 30/4/2014 6,707.91 29/12/2014 7,230.57 30/5/2014 6,647.65
Directions: Compute the total returns, the average of returns, and the standard deviation of the following stocks: 1) 2) EGRH Inc. MP, Ltd. STOCK RETURN AVERAGE OF YEA AVERAGE OF RETURNS (x) YEAR STOCK RETURN PRICE (x₁) PRICE RETU Jan-2021 Po Feb-2021 P8.6 Jan-2021 PO. Feb-2021 PO.090 Mar-2021 P0.097 Apr-2021 PO.189 May-2021 PO.164 Mar-2021 P9.14 Apr-2021 P13.30 May-2021 P13 Jun-2021 P60 Jul-2021 16.94 Jun-2021 P0.495 Jul-2021 PO.28 Aug-2021 PO Sep-2021 90 Aug-202 P13.70 Sep-2 P14.88 Oct-2021 0.375 Oct 21 P15.30 Nov-20 PO.325 N2021 P14.30 Dec-2 PO.330 ec-2021 P15.52 3) SD (8) GSM Inc. STOCK YEAR PRICE Jan-2021 P57.70 Feb-2021 P52.90 Mar-2021 P50.95 Apr-2021 P58.25 May-2021 P74.05 Jun-2021 P94.75 Jul-2021 P85.00 Aug-2021 P105.00 Sep-2021 P114.00 Oct-2021 | P101.00 Nov-2021 P100.40 Dec-2021 P113.80 SD (8) = RETURN (x₁) -x)² AVERAGE OF RETURNS (x-x)² (x) SD (8) = ACEE, Inc. YEAR STOCK RETURN PRICE (x₁) Jan-2021 P13.56 Feb-2021 P20.80 Mar-2021 P22.50 Apr-2021 P18.90 May-2021 P17.00…
Astromet is financed entirely by common stock and has a beta of 1.20. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.9% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 4.6%. Calculate the following: Required: a. The beta of the common stock after the refinancing b. The required return and risk premium on the common stock before the refinancing c. The required return and risk premium on the common stock after the refinancing d. The required return on the debt e. The required return on the company (i.e, stock and debt combined) after the refinancing If EBIT remains constant: f. What is the percentage increase in earnings per share after the refinancing? g-1. What is the new price-earnings multiple? g-2. Has anything happened to the stock price? Complete this question by entering your answers in the tabs below. Reg A to E Reg F to G2…
The following table represents the rate of returns of two stocks in different economic conditions along with their probabilities (the data are also uploaded on moodle) RATES OF RETURN ON STOCKS EXPECTED ECONOMIC PROBABILITY STOCK A STOCK B CONDITIONS RECESSION 0.55 -0.04 -0.02 STABLE 0.35 0.25 0.30 EXPANDING 0.10 0.15 0.20 Answer the following by using mathematical calculations: a) Calculate the expected rate of return for each stock respectively. Explain what the expected value implies. b) Calculate the standard deviation for each stock respectively. Explain what the standard deviation implies. c) If you were an investor in which stock you were going to invest? Justify your answer. d) Calculate the covariance between Stock A and stock B. Discuss. e) Calculate the expected return and the standard deviation of the portfolio consisting 40% in stock A and 60% in stock B. f) Discuss the risk and return associated with investing i All of your funds in stock A ii. All of your funds in stock…
Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(rA.s) E(rB,s) -0.1 0.04 0.08 0.05 0.13 0.07 Recession 0.2 Normal 0.5 Expansion 0.3 Part 1 What is the expected return for stock A? 3+ decimals Submit
ANSWER COMPLETE FOR UPVOTE
7

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Pfin (with Mindtap, 1 Term Printed Access Card) (…

Finance

ISBN:

9780357033609

Author:

Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Pfin (with Mindtap, 1 Term Printed Access Card) (…

Finance

ISBN:

9780357033609

Author:

Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS