tate probability Return on A RETURN ON B POOR 40% -0.06 -0.09 NORMAL 35% 0.16 0.14 GOOD 25% 0.2 0.3 Weight a Weight b .4 .6 what is the return of stock a Answer for part 1 what is the return of stock b Answer for part 2 what is the standard deviation on stock a? Answer for part 3 what is the standard deviation on stock b? Answer for part 4 what is the coefficients of variation on stock a? Answer for part 5 what is the return of the portfolio? Answer for part 6 what is the covariance between a and b ? Answer for part 7 what is the correlation Answer for part 8 what is the standard deviation of the portfolio Answer for part 9

Q: Stock A Stock B 0.09 0.06 0.05 0.01 0.15 0.05 -0.04 0.01 0.08 -0.04 a. What are the expected returns…

A: Expected Return    The expected return of an investment is the average return that an investor can…

Q: f four stocks A, B, C and D have coefficients of variation of 1.80, 2.00, 1.55 and 1.35,…

A: Coefficient of Variation(CV) measures the risk per unit of return.Coefficient of Variation(CV)  =…

Q: what is the return of stock a what is the return of stockb what is the standard deviation on stock…

A: Given: tate Probability(P) Return A Return B Poor 40% -0.08 -0.15 Normal 35% 0.19 0.14 Good…

Q: 2.) Consider the expected returns, standard deviations, Sharpe ratios, and correlation matrix for…

A: Step 1:a. This is a classic minimum variance portfolio problem. We will use solve in excel.1. Set up…

Q: A stock's return has the following distribution: Demand for the Company's Products Probability of…

A: Expected Return is that which is earned by the investor from the stock. If the investor is invest…

Q: 4. Below is information on two actions: Expected performance, standard deviation, or 10% 8% 36 24…

A: The objective of the question is to determine which stock, either Action D or Action E, has the…

Q: Given the re-stated information below (and expected returns you should have already calculated),…

A: In the financial industry, the standard deviation is frequently employed as a gauge of an asset's…

Q: LO 1 7. Calculating Returns and Standard Deviations Based on the following information, calculate…

A: Expected rate of return is the profit or loss on the investor that is assumed to be anticipated by…

Q: Input area: State Probability Stock A Stock B Recession 0.15 0.04 (0.17) Normal 0.55 0.09 0.12 Boom…

A: The expected return of a stock is calculated by multiplying each possible return by the probability…

Q: Question 1 Consider the three stocks in the following table. P, represents price at time t, and Q,…

A: The rate of return refers to the minimum return earned by the investor while investing in the stocks…

Q: Can you tell from the data below which stock's return has the highest correlation with the return of…

A: To Find: which stock's return has the highest correlation

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A: Stock’s expected return is the return which is expected to be generated from the project. This…

Q: ar Find the CAPM beta of the following stock, where Rg is stock return, R Is market return, Rg Is…

A: The Capital Asset Pricing Model is a model that describes the relationship between the expected…

Q: Consider the following stocks and pick the best answer.   Stock Standard Deviation Beta A 25%…

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Q: Expected Return: Discrete Distribution A stock's return has the following distribution: Demand for…

A: Scenario Probability Rate of Return Weak 10.00% -45.00% Below Average 20.00% -8.00% Average…

Q: What is the standard deviation of Stock A returns given the information below about its returns…

A: Solution:- Standard deviation means the deviation of a value around its mean. Standard deviation in…

Q: 1 2 3 4 5 Stock A 0.11 0.07 0.14 -0.02 0.07 Stock B 0.06 0.01 0.04 0.02 -0.03 a. What are the…

A: Here, Year Stock A Stock B 1 0.11 0.06 2 0.07 0.01 3 0.14 0.04 4 -0.02 0.02 5 0.07…

Q: A 1 Stock A 2 Expected return, E(r) 3 Return standard deviation, GA 4 5 Stock B 6 Expected return,…

A: Portfolio return:In the world of investing, a portfolio return is an important indicator that…

Q: The following information is provided about a stock market index m and security i: Statistic Value…

A: Beta of stock shows how much stock is volatile related to the market and how much is going to be the…

Q: robability

A: Expected return can be defined as the return which is obtained by multiplying the potential outcome…

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A: Standard deviation is a measure of volatility. The higher is the figure of the standard deviation…

Q: 16. There are two stocks with the following return and risk values. The correlation between A and B…

A: The expected return of a portfolio gives the weighted average return that an investor can expect…

Q: None

A: a. Calculate the arithmetic average return on these stocks over the sample period.ABC: Arithmetic…

Q: Quantitative Problem: You are given the following probability distribution for CHC Enterprises:…

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Q: Considering the following information for stock K and stock M. Probability of state of economy State…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

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A: Using the Capital Asset pricing Model (CAPM), required rate of return on the stock can be…

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Q: Consider the following probability distribution for stocks A and B: Table 4 Probability Distribution…

A: The formula for calculating the variance of a stock is

Q: Expected return:   % Standard deviation:   %

A: We can determine the expected return and standard deviation using the formula below:In the formula…

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A: Standard deviation (σ) is a quantitative measure that helps in determining the degree of volatility…

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Q: stock’s contribution to the market risk of a well-diversified portfolio is called Q1. ______risk. It…

A: Risk is uncertainty involved and risk may be due to the company or may be due to the overall risk of…

Q: Compute the abnormal rates of return for the following stocks assuming the following systematic risk…

A: StockRitBetaRmtB12.70%0.94.90%F10.10%1.28.30%T14.40%1.355.30%C10.10%0.715.0%E16.10%-0.3511.40%Requir…

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.