Question

Based on the following information: |

Rate of Return If State Occurs | |||||||||

State of | Probability of | ||||||||

Economy | State of Economy | Stock A | Stock B | ||||||

Recession | .17 | .06 | – | .17 | |||||

Normal | .50 | .09 | .12 | ||||||

Boom | .33 | .14 | .29 | ||||||

Calculate the expected return for the two stocks. |

Expected return | |

Stock A | % |

Stock B | % |

Calculate the standard deviation for the two stocks. |

Answer #1

Consider the following information:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Recession
.10
.04
−
.17
Normal
.60
.09
.12
Boom
.30
.17
.27
a.
Calculate the expected return for Stocks A and B. (Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation for Stocks A and B.
(Do not round intermediate...

Consider the following information:
Rate of Return if State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Recession
.10
.04
−
.17
Normal
.60
.09
.12
Boom
.30
.17
.27
a.
Calculate the expected return for Stocks A and B. (Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation for Stocks A and B.
(Do not round intermediate...

Consider the following information:
Rate of Return If State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
.18
.07
−.18
Normal
.55
.10
.11
Boom
.27
.15
.28
Calculate the expected return for the two stocks. (Do not
round intermediate calculations. Enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
Expected return
Stock A
%
Stock B
%
Calculate the standard deviation for the two stocks. (Do
not round intermediate...

Consider the following information:
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Recession
.20
.08
−
.15
Normal
.50
.11
.14
Boom
.30
.16
.31
a.
Calculate the expected return for Stocks A and B. (Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation for Stocks A and B. (Do
not round intermediate...

Consider the following information: Rate of Return If State
Occurs State of Probability of Economy State of Economy Stock A
Stock B Recession .17 .08 ? .12 Normal .58 .11 .17 Boom .25 .16 .34
Calculate the expected return for each stock. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.) Expected return Stock A % Stock
B % Calculate the standard deviation for each stock. (Do not round
intermediate calculations....

Consider the following
information:
Rate of Return if State Occurs
State of
Probability of
State
Economy
of
Economy
Stock A
Stock B
Recession
.23
.025
–.28
Normal
.58
.105
.18
Boom
.19
.170
.41
Requirement
1:
Calculate the expected return for the two stocks.
(Do not round intermediate calculations.
Enter your answers as a percentage rounded to 2
decimal places (e.g., 32.16).)
Expected
return
E(RA)
%
E(RB)
%
Requirement
2:
Calculate...

Consider the following information:
Rate of Return If State Occurs
State of
Probability
of
Economy
State of
Economy
Stock A
Stock B
Recession
.25
.04
–.17
Normal
.30
.10
.17
Boom
.45
.15
.37
a.
Calculate the expected return for the two stocks. (Do
not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places. Omit the "%" sign in your
response.)
Expected return for
A
%
Expected return for
B
%
b.
Calculate...

Consider the following information:
Rate of Return
if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.25
0.05
–0.11
Normal
0.55
0.12
0.16
Boom
0.20
0.16
0.36
a. Calculate the expected return for the two
stocks. (Do not round intermediate calculations. Enter your
answers as a percent rounded to 2 decimal places.)
b. Calculate the standard deviation for the two
stocks. (Do not round your intermediate calculations. Enter
your answers as a percent...

Suppose you observe the following situation:
State of Probability of Return if State Occurs
Economy State Stock A Stock B
Boom .18 ? .06 ? .07
Normal .73 .15 .16
Bust .09 .51 .32
a. Calculate the expected return on each stock. (Do not round
intermediate calculations and enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
Expected return
Stock A %
Stock B %
b. Assuming the capital asset pricing model holds and Stock A’s...

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
.33
.45
.33
Good
.55
.11
.10
.17
Poor
.20
.02
.02
−.05
Bust
.10
−.12
−.25
−.09
a.
Your portfolio is invested 25 percent each in A and C and 50
percent in B. What is the expected...

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