Range of return, average return, standard deviation and coefficient of variation. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment. The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean. The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

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Answer 1

Question

Chapter 8, Problem 8.10P

a)

Summary Introduction

To discuss:

Range of return, average return, standard deviation and coefficient of variation.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

b)

Summary Introduction

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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Please answer the question in image from textbook

Course: FinanceAs a great investor, you are interested in 3 assets to invest: A, B and C. A financial advisor tells you that the returns on the assets are independent of each other, and you are given the following data: Asset A B C E(Ri) 0.05 0.035 0.06 Variance 0.0015 0 0.008 You have not yet analyzed what your degree of risk aversion (A) is, but you know that your utility function behaves as follows: U[ E(Rp)] = E(Rp) - 0.5 * A * Variance. (See attached image for a better understanding) You are asked to:(a) Find the optimal portfolio with these 3 assets {called wA, wB and wC}.b) Calculate the expected return and risk of the optimal portfolio for the following degrees of risk aversion (A):(i) A = 5(ii) A = 10(iii) A = 16 Please ASAP

Answer 2

Question

Chapter 8, Problem 8.10P

a)

Summary Introduction

To discuss:

Range of return, average return, standard deviation and coefficient of variation.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

b)

Summary Introduction

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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Answer 3

Question

Chapter 8, Problem 8.10P

a)

Summary Introduction

To discuss:

Range of return, average return, standard deviation and coefficient of variation.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

b)

Summary Introduction

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.10P

a)

Summary Introduction

To discuss:

Range of return, average return, standard deviation and coefficient of variation.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

b)

Summary Introduction

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.10P

a)

Summary Introduction

To discuss:

Range of return, average return, standard deviation and coefficient of variation.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

b)

Summary Introduction

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Answer 6

Chapter 8, Problem 8.10P

a)

Summary Introduction

To discuss:

Range of return, average return, standard deviation and coefficient of variation.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Answer 7

Chapter 8, Problem 8.10P

a)

Summary Introduction

To discuss:

Range of return, average return, standard deviation and coefficient of variation.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Answer 8

b)

Summary Introduction

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 9

b)

Summary Introduction

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 10

c)

Summary Introduction

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Answer 11

c)

Summary Introduction

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 8.1 - Prob. 1FOE Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQ Ch. 8.1 - Prob. 8.3RQ Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQ Ch. 8.2 - Prob. 8.6RQ Ch. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQ

Solution Summary: The author explains the range of returns, average return, standard deviation, and coefficient of variation.

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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Chapter 8 Solutions

Solution Summary: The author explains the range of returns, average return, standard deviation, and coefficient of variation.

To discuss: Bar chart distribution. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

To determine: Relative riskiness Introduction: Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Want to see the full answer?

Chapter 8 Solutions

To discuss:

Bar chart distribution.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To determine:

Relative riskiness

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.