Suppose your expectations regarding the stock market are as follows:State of the EconomyBoomNormal growthRecessionProbability0.30.60.1MeanStandard deviationHPR24.90 %%41%24E (r) E-1P(s)r (s)Var (r) = o² = s-1p(s)[r (s) - E(r)]²SD (r) = o = √Var (r)Required:Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculationRound your answers to 2 decimal places.)-18K

Mean returns give the expected return on a stock or a portfolio taking into consideration the…

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 E (r) = Σs-1 P(s)r (s) Var (r) = o² = Σs=1P (s)[r (s) — E (r)]² SD (r)=o= √Var (r) Mean Standard deviation HPR 24.90 % % 41% Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculation Round your answers to 2 decimal places.) 24 -18

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 E (r) = Σs-1 P(s)r (s) Var (r) = o² = Σs=1P (s)[r (s) — E (r)]² SD (r)=o= √Var (r) Mean Standard deviation HPR 24.90 % % 41% Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculation Round your answers to 2 decimal places.) 24 -18

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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Similar questions

Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 0.30 -7% 18% Normal economy Boom 0.60 20% 0.10 26% 10% 3% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate the expected rate of return and standard deviation for each investment. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Expected Rate of Return Stocks 12.5% Bonds 11.7 % Standard Deviation % %
% Return on T-Bills, Stocks and Market Index State of the economy Probability T-Bills Phillips Pay -up Rubber-made Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean 7 16.9 2.07 19.60 15 Standard Deviation 0 23.4 15.62 18.92 17.71 Coefficient of Variation 0 1.39 7.55 0.97 1.18 Covariance with MP 0 0.04 -0.3 0.02 0.03 Correlation with Market Index 0 1 -1.0 0.69 1 Beta 0 1.32 -0.88 0.74 1 CAPM Req. Return 7 17.54 -0.02 12.89 15.0 Valuation (Overvalued/Undervalued/Fairly valued) Fairly valued Overvalued Undervalued Undervalued Fairly valued Nature of stock Defensive Aggressive Defensive Defensive Defensive Using the data generated plot the…
1. Suppose your expectations regarding the stock market are as follows: State of the Probability HPR Economy Boom 0.3 33% Normal growth 0.3 19 Recession 0.4 -15 a. What is the expected return, variance and standard deviation? 2. Assume that you manage a risky portfolio with an expected rate of return of 13% and a standard deviation of 29%. The T-bill rate is 5%. Your client chooses to invest 75% of a portfolio in your fund and 25% in a T-bill money market fund. a. What is the expected return and standard deviation of your client's portfolio? b. What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? Explain the sharp ratio.
Compute the standard deviation of the expected return given these three economic states, their likelihoods, and the potential returns: Probability 0.1 Economic State Fast Growth Slow Growth Recession 0.6 0.3 Multiple Choice 6.8 percent 16.5 percent 21.5 percent 46.4 percent Return 50% 8% -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% If the current rate on a treasury bill is 4%, what is the risk premium on the stock? (Note: treasury bill rate is generally regarded as risk free rate) Group of answer choices 10.12% 8.14% 14.12% 11.12%
Vijay
Consider the following scenario analysis: Scenario Recession Normal economy Boom Required A Probability 0.3 0.4 0.3 Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? b. What are the expected rate of return and standard deviation of the portfolio? Rate of Return Stocks Bonds 12% 7 3 Complete this question by entering your answers in the tabs below. Required B Expected return Standard deviation -4% 13 22 What are the expected rate of return and standard deviation of the portfolio? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places % %
Hi there, i need answer ASAP!!!
% Return on T-Bills, Stocks and Market Index States of Economy Probability T-Bills Phillips Pay-up Rubber-Made Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean 7 16.9 20.7 19.6 15 Variance (%) ^2 0 549.09 244.124 358.04 313.6 Standard Deviation 0 23.4326695 15.6244712 18.92194493 17.7087549 Coefficient of Variation 0 1.386548491 7.54805372 0.965405354 1.18058366 Covariance wit MP 0 .0413 -.0275 .0231 .0314 Correlation with Market Index 0 0.9953 -0.9953 0.6894 1.0000 Beta 0 1.32 - 0.88 0.74 1.00 CAPM Req. Return 7.00 % 17.54 % -0.02% 12.89% 15.00% Valuation ( Overvalued / Undervalued/Fairly Valued) Valued Fairly…
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 Probability of Portfolio Return Economy State of Economy If State Occurs Recession <- Boom 21 .79 Expected return Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 11 .21 %
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession E (r) = Σs=1 P(s)r(s) Var (r) = ² = Probability 0.3 0.4 0.3 Σs ₁ p (s)[r (s)- E (r)]² HPR 44% 14 -16 SD (r) = 0 = Var (r) Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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