The variance of stock A is 0.0035 and the return is 0.12, while B has the same return but 0.17 as standard deviation what is the coefficient of variation for stock A what is the coefficlent of variation for stock b

Q: Briefly explain what the Beta of a stock means. What values can it take and what do these imply?…

A: Beta is a measure of a stock's volatility in relation to the overall market. If a stock moves less…

Q: In a regression of the single-index model, the R-square is 68%, residual variance is 0.08, beta…

A: R square = 68% = 0.68 residual variance (σe^2)= 0.08 Beta (B) = 0.7 Let σm^2 = Market variance

Q: Consider the following returns. The variance on a portfolio that is made up of 56% Stock X and 44%…

A: Portfolio variance refers to the total deviation of portfolio returns from the average returns of…

Q: 3. Consider two stocks A and B with expected returns of 6% (stock A) and 8% (stock B). The matrix of…

A: "Hi, Thanks for the Question. Since you asked multiple sub part question, we will answer first three…

Q: A single stock, A has a variance of 0.006 and a covariance with the market portfolio given by 0.013.…

A:

Q: Year Stock A Stock B 2010 - 6% 25% 2011 17% 5% 2012 6% 4% 2013 - 9% - 2% 2014 4% - 4% 2015 13% 25%

A: A stock is a security that describes the percentage of ownership of a particular company held by an…

Q: f a stock's variance of return is written as σ2, then its standard deviation will be written as:

A: Standard deviation and variance are the measures of risk and volatility and both are important…

Q: A mean - variance optimising investor forms a portfolio of a risky stock and the risk - free asset.…

A: Answer image:Allocation of Capital between Risk free assets and Optimal risky portfolio can be…

Q: Consider the following two regression lines for Stock A (left) and B (right) in the following…

A: Security market line:The security market line (SML) of stocks is a vital concept in finance that…

Q: M 20.83 12.50 16.67 a. Construct the minimum risk portfolio of stocks A and B. What is the risk and…

A: "As you have posted multiple subparts in question, according to the honoring guidelines we will…

Q: b. What is the variance of the stock's returns? The variance of the returns is 178.46917. (Round to…

A: Year Return(%) 1 -3.60 2 27.50 3 12.40 4 3.80 To Find: Variance

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: The term "systematic risk," which is sometimes used interchangeably with "market risk" or…

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: Find Portfolio Variance: Assume stock A, stock B, stock C are real estate stocks in a portfolio…

A: Weight of A (Wa) = 20% Wb = 35% Wc = 45% Standard deviation of A (Sa) = 3.2% Sb = 3.5% Sc = 4%…

Q: how do I calculate the product of the deviations so that I can get the Covariance number for the…

A: Data given: Probability Stock Fund Rate of Return A B 0.1 -34% 0.2 -20% 0.3 21% 0.4 36%…

Q: Find the variance of a portfolio with 74% in shares of Paragon Inc. and 26% in shares of Callisto…

A: To find the variance of the portfolio, we can use the following formula:Portfolio Variance = w₁² *…

Q: Which one of the following statements is TRUE? O a. If the distribution of returns for an asset has…

A: The realm of finance and investment is underpinned by an array of mathematical and statistical…

Q: The variance of BMI, Inc. is estimated to be 0.0158 while the variance of QBU, Inc. is estimated to…

A: The portfolio variance refers to the measure of the spread of the returns of the portfolio. It is…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: The term "systematic risk," which is sometimes used interchangeably with "market risk" or…

Q: Total risk is measured by _____ and systematic risk is measured by _____. Group of answer choices…

A: Risk and return are fundamental concepts that are closely intertwined. They represent the trade-off…

Q: The variance of X is 0.36. The standard deviation of Y is 0.38. The correlation between the two is…

A: The variance of a portfolio refers to the measure that is used to find the dispersion of the returns…

Q: The measures of risk include Geometric Mean Arithmetic Mean Median Variance

A: The risk is very important in the stock market and we must quantify the risk so that it can be…

Q: Using the data in the following table,, and the fact that the correlation of A and B is 0.81,…

A: Sure, the volatility (standard deviation) of a portfolio that is 65% invested in stock A and 35%…

Q: Calculate the expected return for Stock A.

A: Expected Return: It represents the profit or loss expected by an investor on an investment. It is…

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: onsider the following information: Probability of State of Economy Rate of Return if St Occurs Stoc…

A: Expected return of the stock depends the return under the probabilistic scenario of the different…

Q: Refer to the table below: Expected return, E(R) Standard deviation, o Correlation 3 Doors, Inc. 18%…

A: Standard deviation is indicated as the variations average amount in the set of data. It is helpful…

Q: Given Portfolio 1 Expected Return= 0.15 Portfolio variance = 0.001 Standard Deviation = 0.0316…

A: A portfolio is the combination of various financial assets into one basket with the aim to earn…

Q: The resulting SML equation for Laternios is given by: Er Laternios + = X (E[rM] - rf)

A: Regression analysis on a stock provides insights into the relationship between the stock's returns…

Q: how do you calculate a stocks average monthly return,its return variance ,standard deviation and…

A: Variance is a measure of risk of returns, it shows how much actual return has deviated from its…

Q: What is the correlation coefficient of the returns of the stock and the returns of the market?

A: Correlation: It is a measure of statistics used to show the degree of association between two…

Q: What is the average annual return? b. What is the variance of the stock's returns? c. What is the…

A: Standard deviation refers to the measurement of the dispersion of data from its mean value which…

Q: he variance of expected returns is equal to the square root of the expected returns. a. True b.…

A: Formula for variance:S2=∑(Xi-X̄) 2/n S2=VarianceXi=Value of one observationX̄=Mean value of all…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Systematic risk impacts all assets to some extent, in contrast to unsystematic risk, which is…

Q: If two stocks have variance σ2=16 each, could their covariance be equal to σ12 = 20

A: It has been provided that the value of variance for two stocks is 16 . Thus, the standard deviation…

Q: If the correlation between two stocks is .49 and the standard deviation of both stocks are 39% and…

A: Covariance between two stocks = Correlation between stocks *Standard deviation of stock 1*Standard…

Q: Based on the information, calculate expected returns for each share, variance for each share and…

A: Here we are provided with 4 different possible outcomes/situations, the probability of each outcome…

Q: The table containing variances (on the diagonal) and covariances between each pair of stocks for…

A: Portfolio is equally weighted To Find: Standard Deviation

Q: Stock Y has a Beta of 0.95 while the standard deviation of its residual is 0.24. The standard…

A: In the given case, we have provided the beta of stock Y, standard deviation of its residual,…

Q: The variances of stocks A and B are 1 percentage square and 4 percentage square, respectively. If…

A: Correlation coefficient is a standardized measure of co-movement between two stocks. The correlation…

Q: Q3. Find the Expected Return, Variance, and Standard Deviation for the Stock Returns 1 and 2. Also,…

A: Expected returns is the average mean of the expected returns. It shows the approximate value that is…

Q: Which of the following statements regarding standard deviation is TRUE:   Group of answer choices…

A: Standard Deviation is a measure of risk. Higher the standard deviation, higher will be the risk and…

Q: average monthly returnn, its return variance, standard deviation and betas

A: Average Monthly Returns: Average monthly returns are the amount which a firm expects to return from…

Q: A stock will have a loss of 10.6 percent in  a bad economy, a return of 10.4 percent in a normal…

A: In the given case, the rate of return and the probability of each economy are given . Expected…

Q: Consider two stocks, Stock D, with an expected return of 13 percent and a standard deviation of 28…

A: Standard deviation of stock D (S1) = 28% Standard deviation of stock I (S2) = 38% Correlation (c) =…

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.