Question

**A stock’s return has the following
distribution:**

**Demand for
Products
Probability of Occurrence of
Demand
Return if**

**Demand Occurs**

Weak 0.1 -40%

Below Average 0.2 -5

Average 0.4 12

Above Average 0.2 21

Strong 0.1 50

**Calculate the stock’s expected return and standard
deviation.**

Answer #1

Stock
Expected Return |
|||||

P | R | ||||

Probability of Occurance of Demand | Return if Demand Occurs | Probability* Return*100 | |||

Weak | 0.1 | -40% | -4 | ||

Below Average | 0.2 | -5% | -1 | ||

Average | 0.4 | 12% | 4.8 | ||

Above Average | 0.2 | 21% | 4.2 | ||

Strong | 0.1 | 50% | 5 | ||

9 | |||||

Stock Expected Return = 9% | |||||

Standard
Deviation |
|||||

Assume P as Probability | Assume R as Return | Assume X is Expected Return | (R-X)^2 | P*[(R-x)^2] | |

Weak | 0.1 | -40.00 | 9.00 | 2401.00 | 240.1 |

Below Average | 0.2 | -5.00 | 9.00 | 196.00 | 39.2 |

Average | 0.4 | 12.00 | 9.00 | 9.00 | 3.6 |

Above Average | 0.2 | 21.00 | 9.00 | 144.00 | 28.8 |

Strong | 0.1 | 50.00 | 9.00 | 1681.00 | 168.1 |

479.8 | |||||

Standard Deviation = Square root of Probabilty * [ (Return - Expected Reurn)^2] for all lines | |||||

Standard Deviation = Square root of 479.8 i.e 21.9 | |||||

Company share’s return has the following distribution:
Demand for the Company’s Products
Probability of this demand occurring
Rate of return if this demand occurs (%)
Weak
0.1
-50
Below Average
0.2
-15
Average
0.4
16
Above Average
0.2
25
Strong
0.1
60
Required:
Calculate the share’s expected return and standard deviation.

Expected Return: Discrete Distribution
A stock's return has the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return if This
Demand Occurs (%)
Weak
0.1
-30
%
Below average
0.2
-10
Average
0.4
16
Above average
0.2
35
Strong
0.1
65
1.0
Calculate the stock’s expected return and standard deviation. Do
not round intermediate calculations. Round your answers to two
decimal places.
Expected return: %
Standard deviation: %

Expected Return: Discrete Distribution
A stock's return has the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return if This
Demand Occurs (%)
Weak
0.1
-40%
Below average
0.2
-5
Average
0.4
15
Above average
0.2
30
Strong
0.1
50
1.0
Calculate the stock's expected return. Round your answer to two
decimal places.
%
Calculate the standard deviation. Round your answer to two
decimal places.
%

Expected Return: Discrete Distribution A stock's return has the
following distribution:
Demand for the Company's Products Weak Below Average Average
Above Average Strong
Probability of This Demand Occurring 0.1 5 0.4 0.2 0.1
Rate of Return if This Demand Occurs (%) -45% -5% 14% 40%
60%
Calculate the stock's expected return. Round your answer to two
decimal places. % Calculate the standard deviation. Round your
answer to two decimal places. %

Expected Return: Discrete Distribution
A stock's return has the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return if This
Demand Occurs (%)
Weak
0.1
-50%
Below average
0.2
-6
Average
0.4
9
Above average
0.2
30
Strong
0.1
75
1.0
Calculate the stock's expected return. Round your answer to two
decimal places.
%
Calculate the standard deviation. Round your answer to two
decimal places.
%

FIN220 – Practice Questions (Module
3)
A stock’s expected return has the following distribution:
DEMAND FOR THE
COMPANY’S PRODUCTS
PROBABILITY OF
THIS
DEMAND OCCURRING
RATE OF RETURN IF
THIS DEMAND OCCURS
(%)
Weak
0.1
(50)
Below Average
0.2
(5)
Average
0.4
16
Above Average
0.2
25
Strong
0.1
60
Calculate the stock’s
expected return and standard deviation.
Selena Maranjian invests the following sum of money in common
stock having expected returns as follows:
Common Stock
Amount Invested in
$...

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A stock's returns have the following distribution:
Demand for the
Company's Products Probability of This
Demand Occurring Rate of Return If
This Demand Occurs
Weak 0.2 (34%)
Below average 0.1 (12)
Average 0.4 16
Above average 0.2 40
Strong 0.1 47
1.0
A.Calculate the stock's expected return. Round your answer to
two decimal places.
%
B.Calculate the stock's standard deviation. Do not round
intermediate calculations. Round your answer to two decimal
places.
%
C. Calculate the stock's...

EXPECTED RETURN A stock’s returns have the following
distribution: Demand for the Company’s Products Weak Below average
Average Above average Strong Probability of this Demand Occurring
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Standard deviation =...

EXPECTED RETURN
A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(40%)
Below average
0.2
(9)
Average
0.4
15
Above average
0.1
28
Strong
0.2
71
1.0
Calculate the stock's expected return. Round your answer to two
decimal places.
%
Calculate the stock's standard deviation. Do not round
intermediate calculations. Round your answer to two decimal
places.
%
Calculate the stock's coefficient of...

EXPECTED RETURN
A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.2
(24%)
Below average
0.2
(12)
Average
0.4
16
Above average
0.1
22
Strong
0.1
70
1.0
Calculate the stock's expected return. Round your answer to two
decimal places.
%
Calculate the stock's standard deviation. Do not round
intermediate calculations. Round your answer to two decimal
places.
%
Calculate the stock's coefficient of...

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