URC Stock Return x; X (x-X)² Year Price 30/1/2014 116.000 28/2/2014 139.000 31/3/2014 141.000 30/4/2014 145.000 30/5/2014 148.000 30/6/2014 153.000 31/7/2014 161.000 29/8/2014 161.000 30/9/2014 186.000 31/10/2014 185.000 28/11/2014 194.000 29/12/2014 195.000

Q: Define Continuous probability distribution

A: Probability Distribution: It is the list of values where each outcome is linked with the…

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: Why is the variance (or standard deviation) used as a measure of risk? What are the advantages and…

A: Reasons of utilizing variance as a risk measure: While consider a lesser risk in investment, fewer…

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: 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: Explain favourable variance.

A: Definition:   Variance analysis: Variance analysis is the process of evaluating the differences…

Q: Calculate the following and determine if variances are favorable

A: Compute the total standard material cost.

Q: The variance and its square root, the standard deviation, are the most commonly used measures of…

A: Variance refers to the expectation of squared deviation of a random value from its arithmetic mean.…

Q: Summarize the concept behind monetary-unit sampling (MUS). How does MUS use attribute-sampling…

A: As per ISA 530, "Audit Sampling" can be defined as application of audit procedure to less than 100%…

Q: Give the general formulas for determining cost and efficiency variances.

A: Cost variance: Cost variance shows the difference of standard cost and actual costs. Efficiency…

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: Define the terms precision (allowance for sampling risk), reliability (confidence), and…

A: Precision (allowance for sampling risk) is a measure of the difference between a sampling projection…

Q: Total risk is measured by and systematic risk is measured by Beta; standard deviation. Standard…

A: There are two types of risks systematic risk and unsystematic risk

Q: Consider two assets with expected return R1=0.22,R2=0.55and variance are s1=0.80, s2=0.88 and…

A: Computation of expected return and variance is enumerated as below:

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: What is an activity variance and what does it mean?

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…

Q: What type of risk is measured by the standard deviation?

A: Standard deviation is the measure of risk that the actual return of an investment will deviate from…

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: Explain and describe the overhead variance.

A: Variance means when the actual cost does not match with the estimated costs. To compute the…

Q: Distinguish between a favorable variance and an unfavorable variance.

A: Favorable Variance: Favorable variance is the variation in the actual and planned output which is…

Q: The concept of beta is most closely associated with:a. Correlation coefficients.b. Mean-variance…

A: d. Systematic Risk Risk related to an overall market. It is a risk in a portfolio that cannot be…

Q: Write down two possible causes for each variance.

A: Variance refers to the differs between the budgeted and actual. It may be favourable and…

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: In general, variance analysis is said to provide information about _________ and __________…

A:

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

Q: What is favorable variance? Give three examples?

A: Favorable Variance: Favorable variance is the variation in the actual and planned output which is…

Q: List the direct materials variances, and briefly describe each.

A: Direct material variances: Direct material variances are the direct material price variance and the…

Q: What are the variances in a 4-variance analysis?

A: Variable overhead spending variance Variable overhead efficiency variance Fixed overhead spending…

Q: Define unfavourable variance.

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…

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.