Question

An analyst predicts that the likelihood of a great economy is 40%, while an average and...

An analyst predicts that the likelihood of a great economy is 40%, while an average and poor economic states share 30% probabilities each. It is predicted that in a good economy, the stock will provide a 20% return, a 10% in an average economy and a 2% return in a poor economy. Calculate the standard deviation of the stock.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

­SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An investor has purchased a gold stock. It is expected that during a good economy, the...
An investor has purchased a gold stock. It is expected that during a good economy, the stock will provide a 4% return, while in a poor economy the stock will provide an 18% return. The probability of a good economy is expected to be 40%. Given this information, calculate the standard deviation for this stock.A)10.60%B)13.30%C)14.20%D)11.50%E)6.86%
Consider the following information:    Rate of Return If State Occurs   State of Probability of   Economy...
Consider the following information:    Rate of Return If State Occurs   State of Probability of   Economy State of Economy Stock A Stock B Stock C   Boom .15 .31 .41 .21   Good .60 .16 .12 .10   Poor .20 −.03 −.06 −.04   Bust .05 −.11 −.16 −.08    a. Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio?   Expected return % b-1 What is the variance of...
Consider the following investment options along with the designated probability distribution of returns for each: (6...
Consider the following investment options along with the designated probability distribution of returns for each: Economic state Probability of occurrence T-Bill Stock A Stock B Very poor 0.1 5.5% (15)% 30% Poor 0.2 5.5% 5% 20% Average 0.4 5.5% 17% 10% Good 0.2 5.5% 20% 0% Very good 0.1 5.5% 35% (10)% The expected return of stock B is 10%. The standard deviation of stock A is 12.46%. a) What's the expected return of stock A? b) What's the standard...
Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A...
Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom .10 .18 .48 .33 Good .300 .11 .18 .15 Poor .40 .05 -.09 -.05 Burst .20 -.03 -.32 -.09 a- Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is the expected return of the portfolio? b- What is the variance of this portfolio? The standard deviation?
Consider the following information:       Rate of Return if State Occurs State of Economy Probability of...
Consider the following information:       Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom .15   .32   .42   .33 Good .45   .19   .13   .12 Poor .30 –.05 –.08 –.06 Bust .10 –.16 –.28 –.09        Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio?     What is the variance of this portfolio?    What...
Consider the following information: Rate of Return if State Occurs State of Economy Probability of State...
Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom .35 .20 .41 .25 Good .25 .11 .16 .15 Poor .20 −.03 −.13 −.02 Bust .20 −.17 −.20 −.11 a. Your portfolio is invested 30 percent each in Stocks A and C and 40 percent in Stock B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as...
A stock ABC can be in one of the four economic states in 2020. The return...
A stock ABC can be in one of the four economic states in 2020. The return for each state is shown below. The probability of each state is the same = 25%: Good state of the economy will cause the stock to return 35% Normal state of the economy will cause the stock to return 15% A bad state of the economy will cause the stock to be flat, return 0% In case of a severe crash in the economy,...
There is a 30% probability of a below average economy and a 70% probability of an...
There is a 30% probability of a below average economy and a 70% probability of an average economy. If there is a below average economy stocks A and B will have returns of -3% and -4%, respectively. If there is an average economy stocks A and B will have returns of 6% and 18%, respectively. Calculate the expected returns and standard deviations of stocks A and B. Stock A Expected Return (4 decimals):   Stock B Expected Return (4 decimals):   Stock...
The probability the economy will boom is 10 percent while the probability of a recession is...
The probability the economy will boom is 10 percent while the probability of a recession is 20 percent. Stock A is expected to return 15 percent in a boom, 9 percent in a normal economy, and lose 14 percent in a recession. Stock B should return 10 percent in a boom, 6 percent in a normal economy, and 2 percent in a recession. Stock C is expected to return 5 percent in a boom, 7 percent in a normal economy,...
Stock A has the following returns for various states of the economy: State of Economy Probability...
Stock A has the following returns for various states of the economy: State of Economy Probability Stock A's Return Recession 5% -50% Below average 25% -3% Average 35% 10% Above average 20% 20% Boom 15% 45% Stock A's standard deviation of returns is _______    20.62%    4.25%    6.47%    11%
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT