Consider the following returns:Year End200420052006200720082009OStock YStock ZRealizedRealizedReturnReturn- 14.6%0.2%4.3%- 3.2%- 25.7%- 58.1%- 27.0%56.9%71.1%27.9%6.7%17.3%- 5.1%17.9%0.9%- 11.3%The covariance between Stock X's and Stock Y's returns is closest to:Stock XRealizedReturn20.1%72.7%MOA. 0.10OB. 0.12OC. 0.69OD. 0.29...

The covariance shows how much the two variables are related and dependent on each other. It lies…

Stock X Realized Return Year End 2004 2005 2006 2007 2008 2009 Stock Y Realized Return - 14.6% 4.3% - 58.1% 56.9% 71.1% 6.7% 17.3% 17.9% 0.9% The covariance between Stock X's and Stock Y's returns is close OA. 0.10 OB. 0.12 Stock Z Realized Return 0.2% -3.2% 20.1% 72.7% - 25.7% - 27.0% 27.9% - 5.1% - 11.3%

Stock X Realized Return Year End 2004 2005 2006 2007 2008 2009 Stock Y Realized Return - 14.6% 4.3% - 58.1% 56.9% 71.1% 6.7% 17.3% 17.9% 0.9% The covariance between Stock X's and Stock Y's returns is close OA. 0.10 OB. 0.12 Stock Z Realized Return 0.2% -3.2% 20.1% 72.7% - 25.7% - 27.0% 27.9% - 5.1% - 11.3%

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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The next year's return on stock X is expected to be either -7% with probability 0.2 or 20% with probability 0.8. Find the stnadard deviation of the returns. a.12.37% b.11.10% c.12.88% d.11.69% e.10.80%
The figure in the popup window, a. The expected return. b. The standard deviation of the return. Note: Make sure to round all intermediate calculations to at least five decimal places. Graph/chart Probability (%) 35- 30- 25- 20 15- 10- 5 9 -25% shows the one-year return distribution for RCS stock. Calculate -10% 0% Return 10% 25% - Q Q 2 X
a. b. d. e. Year 2004 2005 2006 2007 2008 Stock A's Returns, ra (18.00%) 33.00 15.00 (0.50) 27.00 Stock B's Returns, B (14.50%) 21.80 30.50 (7.60) 26.30 Calculate the average rate of return for each stock during the period 2004 through 20 Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock What would the realized rate of return on the portfolio have been each year? Wha would the average return on the portfolio have been during this period? Calculate the standard deviation of returns for each stock and for the portfolio. Calculate the coefficient of variation for each stock and for the portfolio. Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B the portfolio? Why?
A stock has had the following year-end prices and dividends: Year Price Dividend 1 $43.33 2 48.31 $0.54 3 57.23 0.57 4 45.31 0.80 5 52.23 0.85 6 61.31 0.93 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Arithmetic return Geometric return % %
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A stock had the following year-end prices and dividends: Year 0 1 23 Multiple Choice O Price $ 60.55 72.46 62.98 73.50 What was the arithmetic average return for the stock? O O 12.61% 10.09% Dividend 9.02% $ 1.29 1.63 1.64
A stock has had the following year-end prices and dividends: Year Price 0 012345 1 $ 15.00 17.18 18.18 16.68 19.02 22.13 Dividend $ 0.15 0.38 0.40 0.42 0.48 What are the arithmetic and geometric returns for the stock? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Arithmetic return Geometric return % %
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nabled: Final A stock had the following year-end prices and dividends: Year 0 1 2 3 Price $61.03 73.50 63.30 74.38 Multiple Choice O What was the arithmetic average return for the stock? O 9.23% O 18.11% Dividend 18.01% $ 1.33 1.71 1.68 Saved
11-1 Calculate the standard deviation of returns of Stock Q, given the following information. State Stock return Probability of state Recession –5% 25% Normal 10% 50% Boom 25% 25% Select one: a. 10.61% b. 9.53% c. 8.96% d. 7.33% e. 6.30%

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