The returns and variability Introduction: The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested. The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

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Answer 1

Question

Chapter 10, Problem 9QP

a)

Summary Introduction

To determine: The returns and variability

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

(b)

Summary Introduction

To determine: variance of company’s stock and standard deviation of company’s stock.

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Scenario one: Under what circumstances would it be appropriate for a firm to use different cost of capital for its different operating divisions? If the overall firm WACC was used as the hurdle rate for all divisions, would the riskier division or the more conservative divisions tend to get most of the investment projects? Why? If you were to try to estimate the appropriate cost of capital for different divisions, what problems might you encounter? What are two techniques you could use to develop a rough estimate for each division’s cost of capital?

Scenario three: If a portfolio has a positive investment in every asset, can the expected return on a portfolio be greater than that of every asset in the portfolio? Can it be less than that of every asset in the portfolio? If you answer yes to one of both of these questions, explain and give an example for your answer(s). Please Provide a Reference

Answer 2

Question

Chapter 10, Problem 9QP

a)

Summary Introduction

To determine: The returns and variability

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

(b)

Summary Introduction

To determine: variance of company’s stock and standard deviation of company’s stock.

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Answer 3

Question

Chapter 10, Problem 9QP

a)

Summary Introduction

To determine: The returns and variability

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

(b)

Summary Introduction

To determine: variance of company’s stock and standard deviation of company’s stock.

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Answer 4

Question

Chapter 10, Problem 9QP

a)

Summary Introduction

To determine: The returns and variability

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

(b)

Summary Introduction

To determine: variance of company’s stock and standard deviation of company’s stock.

Expert Solution & Answer

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Answer 5

Chapter 10, Problem 9QP

a)

Summary Introduction

To determine: The returns and variability

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

(b)

Summary Introduction

To determine: variance of company’s stock and standard deviation of company’s stock.

Answer 6

Chapter 10, Problem 9QP

a)

Summary Introduction

To determine: The returns and variability

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

Answer 7

Chapter 10, Problem 9QP

a)

Summary Introduction

To determine: The returns and variability

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The arithmetic average return is the average amount of money made by a particular investment. The variance determines the variances among the yearly returns of the stock. The standard deviation is simply the square root of calculated variance that measures the volatility of an investment.

Answer 8

(b)

Summary Introduction

To determine: variance of company’s stock and standard deviation of company’s stock.

Answer 9

(b)

Summary Introduction

To determine: variance of company’s stock and standard deviation of company’s stock.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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To determine: variance of company’s stock and standard deviation of company’s stock.

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