(a) To calculate: By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio. Introduction: Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Question

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Answer 1

Question

Chapter 26, Problem 16PS

Summary Introduction

(a)

To calculate:

By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(b)

To calculate:

By taking the expected market return value of 1% and a standard deviation of market 5% , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in problem 16 .

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

By taking the data of problem 17 and using a misestimated beta of 0.5 , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in part (b).

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(d)

To determine:

The reason for explaining the fact that the misestimated beta affects more to 100 stocks portfolio than a one stock portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

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How to rewrite the problem statement, correcting the identified errors of the Business Problem Information and the current Bank Problem Statement (for the discussion: Evaluating a Problem Statement)

Answer 2

Question

Chapter 26, Problem 16PS

Summary Introduction

(a)

To calculate:

By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(b)

To calculate:

By taking the expected market return value of 1% and a standard deviation of market 5% , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in problem 16 .

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

By taking the data of problem 17 and using a misestimated beta of 0.5 , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in part (b).

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(d)

To determine:

The reason for explaining the fact that the misestimated beta affects more to 100 stocks portfolio than a one stock portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Expert Solution & Answer

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Answer 3

Question

Chapter 26, Problem 16PS

Summary Introduction

(a)

To calculate:

By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(b)

To calculate:

By taking the expected market return value of 1% and a standard deviation of market 5% , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in problem 16 .

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

By taking the data of problem 17 and using a misestimated beta of 0.5 , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in part (b).

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(d)

To determine:

The reason for explaining the fact that the misestimated beta affects more to 100 stocks portfolio than a one stock portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 26, Problem 16PS

Summary Introduction

(a)

To calculate:

By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(b)

To calculate:

By taking the expected market return value of 1% and a standard deviation of market 5% , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in problem 16 .

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

By taking the data of problem 17 and using a misestimated beta of 0.5 , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in part (b).

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(d)

To determine:

The reason for explaining the fact that the misestimated beta affects more to 100 stocks portfolio than a one stock portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Expert Solution & Answer

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Answer 5

Chapter 26, Problem 16PS

Summary Introduction

(a)

To calculate:

By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(b)

To calculate:

By taking the expected market return value of 1% and a standard deviation of market 5% , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in problem 16 .

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

By taking the data of problem 17 and using a misestimated beta of 0.5 , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in part (b).

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(d)

To determine:

The reason for explaining the fact that the misestimated beta affects more to 100 stocks portfolio than a one stock portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 6

Chapter 26, Problem 16PS

Summary Introduction

(a)

To calculate:

By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 7

Chapter 26, Problem 16PS

Summary Introduction

(a)

To calculate:

By using a misestimated beta of 0.5 , ascertain the standard deviation of the (now imperfect) hedged portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 8

Summary Introduction

(b)

To calculate:

By taking the expected market return value of 1% and a standard deviation of market 5% , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in problem 16 .

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 9

Summary Introduction

(b)

To calculate:

By taking the expected market return value of 1% and a standard deviation of market 5% , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in problem 16 .

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 10

Summary Introduction

(c)

To calculate:

By taking the data of problem 17 and using a misestimated beta of 0.5 , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in part (b).

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 11

Summary Introduction

(c)

To calculate:

By taking the data of problem 17 and using a misestimated beta of 0.5 , ascertain the probability of incurring losses in the next month and compare the same with the probability calculated in part (b).

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 12

Summary Introduction

(d)

To determine:

The reason for explaining the fact that the misestimated beta affects more to 100 stocks portfolio than a one stock portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 13

Summary Introduction

(d)

To determine:

The reason for explaining the fact that the misestimated beta affects more to 100 stocks portfolio than a one stock portfolio.

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 26 - Prob. 1PS Ch. 26 - Prob. 2PS Ch. 26 - Prob. 3PS Ch. 26 - Prob. 4PS Ch. 26 - Prob. 5PS Ch. 26 - Prob. 6PS Ch. 26 - Prob. 7PS Ch. 26 - Prob. 8PS Ch. 26 - Prob. 9PS Ch. 26 - Prob. 10PS

Solution Summary: The author analyzes the standard deviation of the (now imperfect) hedged portfolio by using a misestimated beta of 0.5.

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Chapter 26 Solutions