ESSENTIALS CORPORATE FINANCE + CNCT A.
9th Edition
ISBN: 9781259968723
Author: Ross
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 11, Problem 11.1C
What does variance measure?
Expert Solution & Answer
Summary Introduction
To discuss: The measures of variance.
Introduction:
Variance refers to the average difference of squared deviations of the actual data from the mean or expected return.
Explanation of Solution
The variance can measure two factors. They are as follows:
- The variances can measure on the spread of investment returns.
- This helps to determine the riskiness of returns of a security.
Conclusion
Variance is the sum of the difference of squared deviations of possible returns and the expected return multiplied by their respective probabilities.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Lindsay is 30 years old and has a new job in web development. She wants to make sure that she is financially sound by the age of 55, so she plans to invest the same amount into a retirement account at the end of every year for the next 25 years.
(a)
Construct a data table in Excel that will show Lindsay the balance of her retirement account for various levels of annual investment and return. If Lindsay invests $10,000 at return of 6%, what would be the balance at the end of the 25th year? Note that because Lindsay invests at the end of the year, there is no interest earned on the contribution for the year in which she contributes. Round your answer to a whole dollar amount.
$
(b)
Develop a two-way table for annual investment amounts of $5,000 to $20,000 in increments of $1,000 and for returns of 0% to 12% in increments of 1%. From the 2-way table, what are the minimum annual investments Lindsay must contribute for annual rates ranging from 6% to 11%, if she wants to…
Does Airbnb have any impaired assets? If so, what are they?
1. Consider two assets with the following returns:
State Prob. of state
R1
R2
1
2/3
.03 .05
2
1/3
.09 .02
Chapter 11 Solutions
ESSENTIALS CORPORATE FINANCE + CNCT A.
Ch. 11.1 - How do we calculate the expected return on a...Ch. 11.1 - Prob. 11.1BCQCh. 11.2 - What is a portfolio weight?Ch. 11.2 - How do we calculate the expected return on a...Ch. 11.2 - Is there a simple relationship between the...Ch. 11.3 - Prob. 11.3ACQCh. 11.3 - Prob. 11.3BCQCh. 11.4 - Prob. 11.4ACQCh. 11.4 - Prob. 11.4BCQCh. 11.5 - Prob. 11.5ACQ
Ch. 11.5 - Prob. 11.5BCQCh. 11.5 - Prob. 11.5CCQCh. 11.5 - Prob. 11.5DCQCh. 11.6 - Prob. 11.6ACQCh. 11.6 - Prob. 11.6BCQCh. 11.6 - How do you calculate a portfolio beta?Ch. 11.6 - True or false: The expected return on a risky...Ch. 11.7 - Prob. 11.7ACQCh. 11.7 - Prob. 11.7BCQCh. 11.7 - Prob. 11.7CCQCh. 11.8 - If an investment has a positive NPV, would it plot...Ch. 11.8 - Prob. 11.8BCQCh. 11 - What does variance measure?Ch. 11 - Prob. 11.2CCh. 11 - What is the equation for total return?Ch. 11 - Prob. 11.4CCh. 11 - Prob. 11.5CCh. 11 - By definition, what is the beta of the average...Ch. 11 - Section 11.7What does the security market line...Ch. 11 - Diversifiable and Nondiversifiable Risks. In broad...Ch. 11 - Information and Market Returns. Suppose the...Ch. 11 - Systematic versus Unsystematic Risk. Classify the...Ch. 11 - Systematic versus Unsystematic Risk. Indicate...Ch. 11 - Prob. 5CTCRCh. 11 - Prob. 6CTCRCh. 11 - Prob. 7CTCRCh. 11 - Beta and CAPM. Is it possible that a risky asset...Ch. 11 - Prob. 9CTCRCh. 11 - Earnings and Stock Returns. As indicated by a...Ch. 11 - Determining Portfolio Weights. What are the...Ch. 11 - Portfolio Expected Return. You own a portfolio...Ch. 11 - Prob. 3QPCh. 11 - Prob. 4QPCh. 11 - Prob. 5QPCh. 11 - Prob. 6QPCh. 11 - Calculating Returns and Standard Deviations. Based...Ch. 11 - Prob. 8QPCh. 11 - Prob. 9QPCh. 11 - LO1, LO2 10.Returns and Standard Deviations....Ch. 11 - Calculating Portfolio Betas. You own a stock...Ch. 11 - Calculating Portfolio Betas. You own a portfolio...Ch. 11 - Using CAPM. A stock has a beta of 1.23, the...Ch. 11 - Using CAPM. A stock has an expected return of 11.4...Ch. 11 - Using CAPM. A stock has an expected return of 10.9...Ch. 11 - Prob. 16QPCh. 11 - Using CAPM. A stock has a beta of 1.23 and an...Ch. 11 - Using the SML. Asset W has an expected return of...Ch. 11 - Reward-to-Risk Ratios. Stock Y has a beta of 1.20...Ch. 11 - Prob. 20QPCh. 11 - Prob. 21QPCh. 11 - Prob. 22QPCh. 11 - Prob. 23QPCh. 11 - Calculating Portfolio Weights and Expected Return....Ch. 11 - Portfolio Returns and Deviations. Consider the...Ch. 11 - Prob. 26QPCh. 11 - Analyzing a Portfolio. You want to create a...Ch. 11 - Prob. 28QPCh. 11 - SML. Suppose you observe the following situation:...Ch. 11 - Systematic versus Unsystematic Risk. Consider the...Ch. 11 - Beta is often estimated by linear regression. A...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Bright wood! Seating sells reclining chairs for $55.00 per unit. The variable cost is 322 per unit. Each reclining chair requires 5 direct labor hours and 3 machine hours to produce. ibution margin pemachine hon Wrightwood Manufacturing has a break-even point of 1,500 units. The sales price per unit is $18. and the variable cost per us $13. If the company sells 3,500 units, what will its net income be? Crestwood Industries provides the following budget data for its Processing Department for the year 2022: ⚫ Manufacturing Overhead Costs=250 ⚫ Direct Labor Costs $1,234,500 Determine the manufacturing overhead application rate under the base of Direct Labor Costs. Modesto Accessories manufactures two types of wallets leather and canvas. The company allocates manufacturing overhead using a single plant wide rate with direct labor cost as the allocation base. $48 Estimated Overhead Costs = 30,600 Direct Labor Cost per Leather Wallet Direct Labor Cost per Canvas Wallet = $52 Number of…arrow_forwardNo Aiarrow_forwardNo aiarrow_forward
- List and discuss the various values for bonds discussed in the chapter. Additionally, explain in detail what is meant by "Yield to Maturity".arrow_forwardProvide Answer of This Financial Accounting Question And Please Don't Use Ai Becouse In all Ai give Wrong Answer. And Provide All Question Answer If you will use AI will give unhelpful.arrow_forwardYou plan to save $X per year for 6 years, with your first savings contribution in 1 year. You and your heirs then plan to withdraw $43,246 per year forever, with your first withdrawal expected in 7 years. What is X if the expected return per year is 18.15 percent per year? Input instructions: Round your answer to the nearest dollar. 59 $arrow_forward
- Are there assets for which a value might be considered to be hard to determine?arrow_forwardYou plan to save $X per year for 7 years, with your first savings contribution in 1 year. You and your heirs then plan to make annual withdrawals forever, with your first withdrawal expected in 8 years. The first withdrawal is expected to be $43,596 and all subsequent withdrawals are expected to increase annually by 1.84 percent forever. What is X if the expected return per year is 11.34 percent per year? Input instructions: Round your answer to the nearest dollar. $arrow_forwardYou plan to save $41,274 per year for 4 years, with your first savings contribution later today. You then plan to make X withdrawals of $41,502 per year, with your first withdrawal expected in 4 years. What is X if the expected return per year is 8.28 percent per year? Input instructions: Round your answer to at least 2 decimal places.arrow_forward
- You plan to save $X per year for 10 years, with your first savings contribution in 1 year. You then plan to withdraw $58,052 per year for 9 years, with your first withdrawal expected in 10 years. What is X if the expected return is 7.41 percent per year? Input instructions: Round your answer to the nearest dollar. 69 $arrow_forwardYou plan to save $X per year for 7 years, with your first savings contribution later today. You then plan to withdraw $30,818 per year for 5 years, with your first withdrawal expected in 8 years. What is X if the expected return per year is 6.64 percent per year? Input instructions: Round your answer to the nearest dollar. $arrow_forwardYou plan to save $24,629 per year for 8 years, with your first savings contribution in 1 year. You then plan to withdraw $X per year for 7 years, with your first withdrawal expected in 8 years. What is X if the expected return per year is 5.70 percent per year? Input instructions: Round your answer to the nearest dollar. $ SAarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning- Business Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:Cengage
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Business Its Legal Ethical & Global Environment
Accounting
ISBN:9781305224414
Author:JENNINGS
Publisher:Cengage
Portfolio return, variance, standard deviation; Author: MyFinanceTeacher;https://www.youtube.com/watch?v=RWT0kx36vZE;License: Standard YouTube License, CC-BY