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- What are the expected returns of stock "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES.\\n \\nE(ra)= \\nCorrect response: 4.52\\\\pm 0.01\\nE(rb)= \\nCorrect response: 6.04\\\\pm 0.01\\n \\nClick "Verify" to proceed to the next part of the question.\\nThis questions has 4 parts (i.e., you will be clicking "Verify" 4 times)\\n \\n \\n \\n\\n \\n \\nWhat are the standard deviations of stocks "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES.\\n \\nSDa= \\nCorrect response: 8.49\\\\pm 0.01\\nSDb= \\nCorrect response: 13.06\\\\pm 0.01\\n \\nClick "Verify" to proceed to the next part of the question.\\n \\n \\n \\n \\n \\n \\nWhat is the expected return of the portfolio? Enter your answer as a percentage. Do not put the percent sign in your answer. Round your answer to 2 DECIMAL PLACES.\\n \\nE(rp)= \\n \\nClick…You are given the following information: State ofEconomy Return onStock A Return onStock B Bear .112 −.055 Normal .105 .158 Bull .083 .243 Assume each state of the economy is equally likely to happen. a. Calculate the expected return of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) d. What is the correlation between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 4…You are given the following information: Return on State of Economy Stock A Bear Normal Bull Return on Stock B 111 -.054 157 106 .082 242 Assume each state of the economy is equally likely to happen. a. Calculate the expected return of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .321616.) d. What is the correlation between the returns of the two stocks? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .3216.) a. Stock A expected return…
- You are given the following information: State of Economy Bear Normal Bull Return on Stock A a. Stock A Stock B b. Stock A Stock B 114 103 085 Assume each state of the economy is equally likely to happen. a. Calculate the expected return of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) d. What is the correlation between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) Return on Stock B C.…What is the reward-to-risk ratio for Stock X, in decimal form? Round your answer to 4 decimal places (example: if your answer is .03579, you should enter .0358). Margin of error for correct responses: +/- .0005. expected return (implied by market price) Beta Stock X 9.6% 1.46 S&P500 12% ? T-bills 4% ?Q#10: Chapter 08: The index model has been estimated for stocks A and B with the following results: RA= 0.01 +0.5RM + eA. RB = 0.02 + 1.3RM + eB. OM = 0.25; σ(EA) = 0.20; σ(eB) = 0.10. a. b. The covariance between the returns on stocks A and B is The standard deviation for stock A is The standard deviation for stock B is C. d. Discuss the advantages of the single-index model over the Markowitz model.
- Back to Assignment Attempts 0 1. Problem 8.01 (Expected Return) eBook A stock's returns have the following distribution: Average 0 / 4 Standard deviation: Coefficient of variation: Sharpe ratio: 0.1 0.1 0.3 0.3 0.2 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Problem Walk-Through % Demand for the Company's Products Probability of this Demand Occurring Weak Below average Average Above average Strong Rate of Return if this Demand Occurs (30%) (10) 18 37 63The following three stocks are available in the market: E(R) В 10.4% 1.26 Stock A Stock B 13.6 1.06 Stock C 16.1 1.46 Market 14.0 1 Assume the market model is valid. a. The return on the market is 14.8 percent and there are no unsystematic surprises in the returns. What is the return on each stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Assume a portfolio has weights of 30 percent Stock A, 45 percent Stock B, and 25 percent Stock C. The return on the market is 14.8 percent and there are no unsystematic surprises in the returns. What is the return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock A a. Stock B a. Stock C b. Portfolio return -26.75 % % % %The following three stocks are available in the market: E(R) β Stock A 11.0 % 1.32 Stock B 14.2 1.12 Stock C 16.7 1.52 Market 14.6 1 Assume the market model is valid. a. The return on the market is 15.4 percent and there are no unsystematic surprises in the returns. What is the return on each stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Assume a portfolio has weights of 30 percent Stock A, 45 percent Stock B, and 25 percent Stock C. The return on the market is 15.4 percent and there are no unsystematic surprises in the returns. What is the return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
- Consider information given in the table below and answers the question asked thereafter: State Probability return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% i. Calculate expected return on each stock? On the basis of this measure, which stockyou will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of thismeasure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of thismeasure, which stock you will choose?What is the CAPM required return for Stock Z, in decimal form? Round your answer to 4 decimal places (example: if your answer is .13579, you should enter .1358). Margin of error for correct responses: +/- .0005. expected return (implied by market price) Beta Stock Z 9.7% 1.43 MRP 6% ? T-bonds 5% ?If Stock I is correctly priced right now, its Beta must be ______ . Round your answer to 2 decimal places (example: if your answer is 1.2357, you should enter 1.24). Margin of error for correct responses: +/- .02. expected return (implied by market price) Beta Stock I 12.4% ?? S&P500 11% T-bonds 4%
