Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 12 percent and standard deviation of 40 percent. The average return and standard deviation of WholeMart are 13 percent and 30 percent; and of Fruit Fly are 18 percent and 35 percent. Rank Stock 1 2 3

Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 12 percent and standard deviation of 40 percent. The average return and standard deviation of WholeMart are 13 percent and 30 percent; and of Fruit Fly are 18 percent and 35 percent. Rank Stock 1 2 3

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

You are examining three different shares. Share A has expected return -0.30%, beta -0.49, and volatility 29.00%. Share B has expected return 9.80%, beta 1.09, and volatility 24.00%. Finally, share C has expected return 8.60%, beta 0.88, and volatility 13.00%. The risk free rate is 2.70%, while the market price of risk is 7.00%. According to the CAPM, which share is undervalued?
Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 6.95% 15% 0.7 B 8.35 15 1.1 C 10.45 15 1.7 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 4.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) What is the market risk premium (rM - rRF)? Round your answer to one decimal place. % What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. % What would you expect the standard deviation of Fund P to be? Less than 15% Greater than 15% Equal to 15%
Below are standard deviations of four stocks: M, N, O and P. Stock M N O P Standard deviation 12% 20% 15% 30% 1. Which stock is the riskest? 2. Based on the risk-return tradeoff, which stock should provide the highest 3. If stock O provides a higher return than stock P, what should happen?
Rank the following three stocks by their risk-return relationship, best to worst. Night Ryder has an average return of 12 percent and standard deviation of 32 percent. The average return and standard deviation of WholeMart are 11 percent and 25 percent; and of Fruit Fly are 16 percent and 40 percent.
Ahmed observed the following data of two stocks as shown in the below table. Which stock do you advise Ahmed to select according to the required rate of return? And explain why? Stock A Stock B Market Standard Deviation Return 30% 30% 22% Correlation Coefficient between A & M -30% Correlation Coefficient between B & M 30% Expected Market Return 11% Risk-Free rate of return 5%
Consider the three stocks in the following table. Pt represents price at time t, Qt represents shares outstanding at time t. Stock C splits two for one in the second period from t=1 to t=2. Calculate the rate of return on a price-weighted index consisting of the three stocks for the first period from t=0 to t=1. Answer in percentage. Answer options: 0.00% 2.49% 6.06% 8.95% 1.30%
1 The information regarding the risk level of three different stocks is presented below. 1. Which stock has the highest level of risk? Interpret the beta of that stock. 2. Which stock has the level of risk that is closest to the market level of risk? How do we measure the market level of risk? Beta Standard Deviation Flylnc 2.1 15.8% Airco 1.1 17.3% SkyCorp 0.8 21.5%
You are examining three different shares. Share A has expected return 8.40%, beta 1.46, and volatility 27.00%. Share B has expected return 1.40%, beta -0.04, and volatility 33.00%. Finally, share C has expected return 5.90%, beta 1.00, and volatility 14.00%. The risk free rate is 1.30%, while the market price of risk is 5.10%. According to the CAPM, which share is undervalued? A B C None of the shares is undervalued
Suppose you are given the following information about 2 stocks, what is the return standard deviation of a portfolio weighted 55% in stock A and 45% in stock B? E(RA)=16% E(RB)=8% σA=22% σB=12% σA,B=−0.003696 Enter rate in decimal form, rounded to 4th digit, as in "0.1234"
ou are examining three different shares. Share A has expected return 5.40%, beta 0.41, and volatility 11.00%. Share B has expected return 6.90%, beta 0.67, and volatility 23.00%. Finally, share C has expected return 7.10%, beta 0.65, and volatility 22.00%. The risk free rate is 2.90%, while the market price of risk is 7.40%. According to the CAPM, which share is undervalued? A B C None of the shares is undervalued
You are given the returns for the following three stocks: Stock B Stock C Stock A 14.00% 14.00% -19.00% 14.00 14.00 34.00 14.00 22.00 37.00 14.00 14.00 14.00 4.00 Year 1 2 3 4 5 7.00 13.00 Calculate the arithmetic return, geometric return, and standard deviation for each stock. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Arithmetic return Standard deviation Geometric return Stock A 14.01 % 0.00 % 14.01 % Stock B 14.00 % 14.01 % Stock C 14.00 % 14.02 %
Willamette Manufacturing estimated that its total payroll for the coming year would be $670,000. The workers' compensation insurance premium rate is 0.3%. Required: 1. Calculate the estimated workers' compensation insurance premium.$ Prepare the journal entry for the payment as of January 2, 20--. Page: DATE ACCOUNT TITLE DOC. NO. POST. REF. DEBIT CREDIT 1 20--Jan. 2 1 2 2 3 Paid estimated workers' compensation insurance premium 3 2. Assume that Willamette Manufacturing's actual payroll for the year was $694,000. Calculate the total insurance premium owed.$ Prepare a journal entry as of December 31, 20--, to record the adjustment for the underpayment. The actual payment of the additional premium will take place in January of the next year. Page: DATE ACCOUNT TITLE DOC. NO. POST. REF. DEBIT CREDIT 1 20--Dec. 31 1 2 2 3 Adjustment for insurance premium…