The variances of stocks A and B are 1 percentage square and 4 percentage square, respectively. If the covariance between the two stocks is 0.6 percentage square, what is the correlation?  Dont

Q: a covariance of 0.011. If their respective standard deviations are 13% and 22%, what is their…

A: Given, Covariance = 0.011 Standard deviation of security 1 = 13% or 0.13 Standard deviation of…

Q: 4. Given the probability and returns associated with each state, what is the expected return? What…

A: Calculations of expected return and standard deviation: Excel workings:

Q: What is the expected return? What is the variance? What is the standard deviation?

A: State Probability Returns       Boom 0.25 0.15 Normal 0.50 0.08 Slow down 0.15 0.04…

Q: If two returns are positively related to each other, they will have a ________, and if they are…

A: Covariance: calculates the directional relationship between two variables.

Q: The regression analysis is normally depicted as "y = Ax+ B." What does "A" indicate in the equation?…

A: FOR ANY QUERIES, PING ME     HAPPY LEARNING

Q: Which one of the following measures is relevant for assessing exposure to systematic risk?

A: Systematic Risk: It refers to the risk caused by factors that are not in the control of an…

Q: Use the following sample data to calculate the following summary statistics X Y 5 20 7 50 4…

A: S.NO X Y 1 5 20 2 7 50 3 4 10 4 5 20 5 5 30 6 5 20 7 3 10 8 8 50 9 2 10 10 2 5…

Q: Suppose we have the following values for variables X and Y: XY 06 13 20 What is the value for the…

A: Solution:Correlation coefficient measures the degree of relationship between two variables. If it is…

Q: Define the following terms: Factor risk premium Unit root Random walk with drift…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Assume the mean and standard deviation of sample returns are​ 8% and​ 10% respectively. Assuming…

A: Sample returns are 8% Standard deviation is 10% Returns are normally distributed To Find:…

Q: 4. Which of the following statements is FALSE? A) A stock's return is perfectly positively…

A: Return on stock is the return that is gained by the investor for an investment in stock.

Q: 30. Based on the Regression result for KLIC, if Variance of the Residuals is equal 0.0126 and…

A: Variance of the Residual Risk=0.0126 And variance of SPY=0.0037

Q: The value of a correlation is reported to be r = 0.25. How is this interpreted?

A: Correlation: In the financial and investing sectors, correlation is a statistic that indicates the…

Q: Two securities have a covariance of 0.076. If their respective standard deviations are 13% and 22%,…

A: Correlation Co-efficient of Variance is the ratio of standard deviation of the security with the…

Q: What is the sample variance and standard deviation for x =23,17, 15, 30, 25.

A: Sample Variance = ΣX2 - n(Avg X)2/(n - 1) Standard Deviation =√sample Variance

Q: q12-  In the distribution of a variable, if the mean is much smaller than the median, the data…

A: The mean, mode and median are the three categories which can be used to figure out if you have a…

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: The standard deviation of a standard normal distribution

A: The correct answer is: (B) Is always equal to 1. Yes, it is true. The standard deviation of a…

Q: Standard deviation is a statistical measure of the dispersion of returns around the expected value…

A: The standard deviation is a statistical measure that may be used to assess the amount of dispersion…

Q: If two returns are positively related to each other, they will have a ________, and if they are…

A: In the given question we are given 4 options regarding a statement and we need to choose correct…

Q: What is the standard deviation of a random variable q with the following probability distribution?…

A: Standard deviation is a statistical measure that indicates how much the data in a set deviates or…

Q: 17. The purpose of computing a minimum variance hedge ratio is to minimize the variance of the: (a)…

A: Minimum Variance Hedge Ratio is also known as optimal  hedge ratio. The minimum variance hedge ratio…

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: Which of the options below is most likely FALSE based on the following scatter plot? Variable B 4.5…

A: Requirements of the question and the values we have to determine the false statement.

Q: Which of the following are measurements of risk? range coefficient of variation mean average…

A: The measurements of risk are range, coefficient of variation, standard deviation, and median.…

Q: 1. What percent of the area under the standard normal curve is within one standard deviation of…

A: The objective of the question is to find out the percentage of the area under the standard normal…

Q: Variance percentage is calculated by dividing the choose your answer... by the choose your answer...

A: Variation refers to the difference i.e. the difference between the current amounts with the budgeted…

Q: Is the equation for volatility not Σ P ( x - x̄ )^2 ? And I am finding online that covariance is…

A: Formula for Variance = Σ P ( x - x̄ )^2

Q: How is the standard deviation of returns calculated?

A: Standard deviation is ascertained as follows: The mean worth is dictated by including all the…

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: Comment on the SAS regression output including a-e. Compare and comment on the differences between…

A: The regression output provided is from a SAS procedure, which is used to estimate the parameters of…

Q: The standard deviation of.alt=”f$ar{X},f$ “> is usually called the A.standard error of the sample…

A: B.randomized standard error

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.