Return 19.34% 6.99% 38.99% Deviation of retums 6 prediction interval of the S&P500 is between % and %. (Round to two decimal places and put the lower number first.)

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: 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: 0 0 0 о

A: Hi student Since there are multiple questions, we will answer only first question.  Every business…

Q: Risk-Adjusted Performance Measures Sharpe Ratio Treynor's Measure Information Ratio A 0.4750 -0.0082…

A: Risk adjusted measures are used to determine the reward an investor would get for taking that amount…

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: Consider the following information for the next year's return on IBM. probability return 10% 20% 0.8…

A: The profit or loss that an investor predicts on an investment with known historical rates of return…

Q: Month 12 84 SE 86 37 39 40 Excess Returns over the risk free rate M 0.67 3.72 -1.56 2 -2.08 1.69…

A: In this question, we are provided with Excess return over the risk-free rate and need to find out…

Q: Summary statistics for returns on two stocks X and Y are listed below. Stock X Stock Y Mean 2.85%…

A: Variance of a portfolio depicts the risk of the portfolio and is dependent upon standard deviation…

Q: Consider the following results for independent random samples taken from two populations. Sample 1…

A: Solution A- Point of estimate the difference between the two population means= x1¯ - x2¯…

Q: splits two-tor-one in the last period. 90 P1 100 95 200 45 200 110 A B C Po 90 50 100 Rate of return…

A: StocksPrice at time =0Shares outstandingPrice at time= 1Outstanding shares at 1Price at time…

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: find the trynors ratio for q and compare it to treynor ratio for m does this analysis indicate…

A: Here,Beta q is 1.25rf is 2%rm is 12%rq is 13.5%

Q: What is the standard deviation given the following information? Probability Possible Returns 24.0%…

A: Probability (P)Possible Returns0.2524.0%0.2036.0%0.559.0%Required:Standard Deviation =?

Q: Given the following historical data, what is the moving average forecast for period 6 based on the…

A: A moving average forecast is a statistical technique used to analyze and predict trends in time…

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: Please fill out the table below. Use your estimates from the table to answer the multiple-choice…

A: Calculations are done using excel. Note, answer closest to the calculation are chosen from the…

Q: The continuously compounded annual return on a stock is normally distributed with a mean of 23% and…

A: We can use the formula for a confidence interval for a normal distribution, which is: CI = mean ± z…

Q: Required: a. Calculate the total variance for an increase of 0.25 in its beta. (Do not round…

A: Total variance in a portfolio refers to the overall risk or volatility of the portfolio, taking into…

Q: A hedge fund has created a portfolio using just two stocks. It has shorted $35,000,000 worth of…

A: The expected return of the portfolio refers to the average profits that the portfolio provides to…

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: 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: Volatility (Standard Deviation) Correlation with Microsoft HP Alaska Air Southwest Airlines Ford…

A: Volatility of several stocks have been given. The correlation matrix between them has also been…

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

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

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: 8-7 PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4 million investment fund. The…

A: Portfolio is the collection of financial investments in different types of instruments such as…

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: Following are three economic states, their likelihoods, and the potential returns: Probability…

A: Variance= Sum of( Squared deviation between return and expected return * probability)Standard…

Q: QUESTION 2 Over the past five years, a stock produced returns of 15.5%, -10.5%, 21.45%, 13.5%, and…

A: Solving Q2   Formula to be used: Mean= ∑X̄ /n Variance= ∑(X-X̄)^2/(n-1) Standard Deviation =…

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: 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: Over the past 4 years an investment returned 0.1, -0.12, -0.08, and 0.13. What is the standard…

A: Given information : Returns for past 4 years   Year Stock returns 1 0.1 2 -0.12 3 -0.08 4…

Q: YEAR 2018 2019 2020 2021 2022 R(BOA) 28% 24% -6% 23% 20% R(WF) 26% 25% -9% 21% 26% Calculate the…

A: ER= Return*ProbabilityVariance = probability* deviation^2standard deviation= square root of variance

Q: 3. Security A has the following probability distribution of returns: Scenario Probability Return 0.1…

A: Calculation: Formula snip:

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.