Question 3: (20 marks)Consider the following Table:YEAR2018.2019202020212022R(BOA)28%24%-6%23%20%R(WF)26%25%-9%21%26%R(M) Probability0.350.150.200.150.1532%29%- 2%31%35%Calculate the following:1. The Expected Returns for BOA, WF and the Market,respectively.2. The Variances of the Returns for BOA, WF and the Market,respectively.3. The Standard Deviations of the Returns for BOA, WF and theMarket, respectively.4. The Coefficients of Variation for BOA, WF and the Market,respectively.s. The Covariances for BOA and WF respectively.6. The Betas for BOA and WF respectively.7. The Correlation Coefficients for BOA and WF respectively.8. Assume a Risk-Free Rate is 4%. Calculate the CAPM for BOAand WF stocks respectively.9. What is the RISK PREMIUM for BOA and WF respectively?10. Explain your answers carefully to support your findings.

ER= Return*ProbabilityVariance = probability* deviation^2standard deviation= square root of variance

Answered: YEAR 2018 2019 2020 2021 2022 R(BOA)…

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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