4. Measuring standalone risk using realized dataReturns earned over a given time period are calledrealized returns. Historical data on realized returns isoften used to estimate future results. Analysts acrosscompanies use realized stock returns to estimate therisk of a stock. Five years of realized returns for HappyDog Soap Inc. (Happy Dog) are given in the followingtable: 2016 2017 2018 2019 2020 Stock return8.75% 5.95% 10.50% 14.70% 4.55% Also note that:1. While Happy Dog was started 40 years ago, itscommon stock has been publicly traded for the past 25years. 2. The returns on Happy Dog's equity arecalculated as arithmetic returns. Given this return data,the average realized return on Happy Dog Soap Inc.'sstock is. The preceding data series represents asample of Happy Dog's historical returns. Based on thisconclusion, the standard deviation of Happy Dog'shistorical returns is. If investors expect the averagerealized return on Happy Dog Soap Inc.'s stock from2016 to 2020 to continue into the future, its expectedcoefficient of variation (CV) is expected to equal.

Standard deviation is a statistical tool used to quantify the degree of variability or dispersion of…

the average realized return on Happy Dog Soap Inc.'s stock is. The preceding data series represents a sample of Happy Dog's historical returns. Based on this conclusion, the standard deviation of Happy Dog's historical returns is. If investors expect the average realized return on Happy Dog Soap Inc.'s stock from 2016 to 2020 to continue into the future, its expected coefficient of variation (CV) is expected to equal.

the average realized return on Happy Dog Soap Inc.'s stock is. The preceding data series represents a sample of Happy Dog's historical returns. Based on this conclusion, the standard deviation of Happy Dog's historical returns is. If investors expect the average realized return on Happy Dog Soap Inc.'s stock from 2016 to 2020 to continue into the future, its expected coefficient of variation (CV) is expected to equal.

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 returns on shares of Valley Transporter are predicted under the following various economic conditions: Recession -0.11 Normal +0.08 Boom +0.25 If each economy state has the same probability of occurring (33.33%), what is the variance of the stock?
man.1
The expected rate of return for the stock of Cornhusker Enterprises is 15 percent, with a standard deviation of 5 percent. The expected rate of return for the stock of Mustang Associates is 10 percent, with a standard deviation of 2 percen a. Which stock would you consider to be riskier? Round your answers to two decimal places. The coefficient of variation of returns for Cornhusker's stock: The coefficient of variation of returns for Mustang's stock: ✓is riskier. -Select- b. If you knew that the beta coefficient of Cornhusker stock is 0.9 and the beta of Mustang is 0.6, how would your answer to Part a change? Looking only at systematic risk -Select- ✓is riskier.
Refer to the given (annual data to compute the stock's beta if the market standard deviation is 0.22 and the market and the stock share +0.5 correlation. The current market price of the stock is $50 per share. Probability End-of-period prices .15 35 .10 42 Ć .30 50 .20 55 .25 60
The returns of a stock follow the normal distribution, with average return of 13.2% and standard deviation of 23.7%. What is the probability that in any given year, the stock's return will be between -34.2% and +36.9%? Assume the following: the one standard deviation probability range is 0.68; the two standard deviation probability range is 0.95; and the three standard deviation probability range is 0.99. 0.685 O 0.955 O 0.750 0.815 O 0.950
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company. Year 1 $ 62.18 40.30 2.35 a. High target price b. Low target price Year 2 $67.29 43.18 2.58 Year 3- $74.18 39.27 2.73 Year 4 $78.27 46.21 High price Low price EPS Earnings are expected to grow at 9 percent over the next year. 6. What is the high target stock price in one year? 32.16. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. b. What is the low target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. 2.890
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The historical returns for two investments-A and B-are summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that follow. a. On the basis of a review of the return data, which investment appears to be more risky? Why? b. Calculate the standard deviation for each investment's returns. c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a. a. On the basis of a review of the return data, which investment appears to be more risky? Why? (Choose the best answer below.) A. The riskier investment appears to be investment B, with returns that vary widely from the average relative to investment A, whose returns show less deviation from the average. B. Investment A and investment B have equal risk because the average returns are the same. C. The riskier investment appears to be investment A, with returns that vary widely from the average relative to investment B, whose…
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