State of Nature Recession Expansion Probability 70% 30% State Dependent Return A -.08 .28 State Dependent Return B -.04 .16 Given the data in the table above, what comes closest to the standard deviation of Stock A and the standard deviation of Stock B? O A. The standard deviation of Stock A = .10 and the standard deviation of Stock B =.1033 B. The standard deviation of Stock A = .10 and the standard deviation of Stock B =.0917 C. The standard deviation of Stock A = .02 and the standard deviation of Stock B =.1033 O D. The standard deviation of Stock A = .0000 and the standard deviation of Stock B =.0000 O E. The standard deviation of Stock A = .1650 and the standard deviation of Stock B =.0917

State of Nature Recession Expansion Probability 70% 30% State Dependent Return A -.08 .28 State Dependent Return B -.04 .16 Given the data in the table above, what comes closest to the standard deviation of Stock A and the standard deviation of Stock B? O A. The standard deviation of Stock A = .10 and the standard deviation of Stock B =.1033 B. The standard deviation of Stock A = .10 and the standard deviation of Stock B =.0917 C. The standard deviation of Stock A = .02 and the standard deviation of Stock B =.1033 O D. The standard deviation of Stock A = .0000 and the standard deviation of Stock B =.0000 O E. The standard deviation of Stock A = .1650 and the standard deviation of Stock B =.0917

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

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Consider the following information: Rate of return State of Economy Probability Stock A Stock B Recession 0.30 -40% 6% Normal 0.50 18% 4% Воom 0.20 142% 2% [Note: take full decimal places in the middle steps and round your FINAL answer to 2 decimal places (i.e. S1.23 or 1.23%)] (a) Calculate the expected return for the two Stocks A and B respectively. (in %) (b) Calculate the standard deviation for the two Stocks A and B respectively. (in %) (c) If you have $2 million to invest in a stock portfolio and your goal is to create a portfolio with an expected return of 16.92%, how much money will you invest in Stock A and Stock B respectively? (d) Based on your answer in part (c), calculate the standard deviation for the portfolio. (in %) (e) If enough stocks (i.e. 100 randomly selected stocks) had been included in the portfolio, what happen to the standard deviation for the portfolio? Explain. [within 100 words]
pm.3
Consider the following information: Probability of State of State of Economy Boom Bust Economy 0.55 8.45 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate Round the final answer to 2 decimal places.) Expected return Variance Rate of Return if State Occurs Stock A Stock B Stock C 0.06 0.14 0.34 0.10 0.02 -0.07 10.65% b. What is the variance of a portfolio invested 25% each in A and B and 50% in C? (Do not round intermediate calc the final answer to 6 decimal places.)
Stock W has the following returns for various states of the economy: Compute standard deviation for this stock. State of the Economy Probability Stock W's Return Recession 10% -30% Below Average 20% -2% Average 40% 10% Above Average 20% 18% Boom 10% 40%
Vijay
Consider the following information: State of Economy Boom Bust Probability of State of Economy a. Expected return b. Variance .60 .40 Rate of Return if State Occurs % Stock A Stock B .23 .08 .15 .18 a. 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.) b. What is the variance of a portfolio invested 24 percent each in A and B and 52 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) Stock C .42 -.09
Q4: Assume the following information for stocks A and B. • Expected return on Stock A = 18%. • Expected return on Stock B = 23%. • Correlation between returns of Stock A and Stock B = 0.10. • Standard deviation of returns on Stock A = 40%. • Standard deviation of returns on Stock B = 50%. Compute The expected return Standard deviation
Consider the following information: State of Economy Probability of State of Economy Boom Bust .72 .28 a. Expected return b. Variance of portfolio Rate of Return if State Occurs Stock A Stock B .04 .25 13.73 % .10 .19 a. What is the expected return on an equally weighted portfolio of these three stocks? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the variance of a portfolio invested 27 percent each in A and B and 46 percent in C? Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161. Stock C .30 -.10
Consider the following data State of Nature Prob. Stock A Return Boom 0.3 16.00% Normal 0.6 14.20% Recession 0.1 8.00% What is the expected return for Stock A? Group of answer choices 14.12% 12.14% 15.12% 14.00%
View Policies Current Attempt in Progress Calculate the correlation coefficient (PA) for the following situation: (Round intermediate calculations and the final answer to 4 decimal place, e.g. 0.2921.) State of the economy High growth Moderate Recession Probability of Expected return on occurrence stock A in this state 47.0% 26.0% -14.0% 25% 20% 55% Correlation coefficient Expected return on stock B in this state 64.0% 34.0% -24.0%
calculate the expected return Rate of return State of Economy Probability Stock A Stock B Recession 0.15 1.00% -0.25 Normal 0.55 9.00% 0.15 Boom 0.30 14.00% 0.38
Consider the following information: State of Economy Recession Expected return Normal .60 Boom 20 Calculate the expected return for Stock A. Expected return Probability of State of Economy Calculate the expected return for Stock B. Standard deviation 20 8.40% 8.02% 8.82% 7.95% 8.74% Standard deviation Calculate the standard deviation for Stock A. 10.20% 8.33% 10.71% 9.69% 10.61% 2.94% 2.08% 3.09% 2.79% 3.06% Calculate the standard deviation for Stock B. 17.42% 12.32% 18.29% 16.55% 18.11% Rate of Return if State Occurs Stock A .03 .09 12 Stock B -.21 N 13 33

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