Question

question 7

An investment earned the following returns for the years 2013 through 2016:15%, 5%, 30%, and 10%. What is the variance of returns for this investment?

Select one:

a. 0.1541

b. 0.0892

c. 0.1747

d. 0.0323

e. 0.0117

question 8

Given the following information, what is the standard deviation of stock A if it has an expected return of 33% in a boom economy, an expected return of 18% in a good economy, and an expected return of 2% in a recession? The probabilities of boom, normal, recession are 0.2, 0.6, and 0.2, respectively.

Select one:

a. 0.0527

b. 0.0891

c. 0.0981

d. 0.0703

e. 0.0128

Answer #1

*7)*

** 8)** Average return = 33% x 0.2 + 18% x
0.6 + 2% x 0.2 = 17.8%

Standard deviation in computed as follows -

or, Std Dev = 9.806% or **0.0981 (Option
c)**

Question 3
An investment earned the following returns for the years 2013
through 2016:20%, 50%, -30%, and 10%. What is the variance of
returns for this investment?
a. 0.0892
b. 0.2987
c. 0.1541
d. 0.1092
e. 0.0292
question 4
Al's Audio has a cost of debt of 7 percent, a cost of equity of
12 percent, and a cost of preferred stock of 8 percent. The weight
for debt is 0.16, the weight for preferred shares is 0.34, and the...

An investment earned the following returns for the years 2013
through 2016:20%, 5%, -30%, and 10%. What is the variance of
returns for this investment?

Question 22
A firm is worth $1,400, has a 35% tax rate, total debt of $600,
an unlevered return of 15%, and a cost of debt of 5.5%. What is the
cost of equity?
Select one:
a. 18.41%
b. 16.67%
c. 19.63%
d. 18.90%
e. 17.93%
Question 23
Given the following information, what is the standard deviation
of stock A if it has an expected return of 25% in a boom economy,
an expected return of 18% in a good...

Given the following information, what is the standard deviation
of stock A if it has an expected return of .27% in a boom economy,
an expected return of 18% in a good economy, and an expected return
of 3% in a recession? The probabilities of boom, normal, recession
are 0.2, 0.6, and 0.2, respectively.

Problem 13-7 Calculating Returns and Standard Deviations [LO1]
Consider the following information: Rate of Return If State Occurs
State of Probability of Economy State of Economy Stock A and Stock
B Recession .17 .06 -.17 Normal .50 .09 .12 Boom .33 .14 .29
Calculate the expected return for each stock. Calculate the
standard deviation for each stock.

What is the expected
return on this stock given the following information?
State of the
Economy
Probability
E(R)
Boom
0.4
15
%
Recession
0.6
-20
%
Multiple Choice
-8.07 percent
-6.00 percent
-5.20 percent
-5.70 percent
-7.69 percent
A portfolio consists
of the following securities. What is the portfolio weight of stock
A?
Stock
#Shares
PPS
A
200
$
48
B
100
$
33
C
250
$
21
Multiple Choice
0.389
0.451
0.336
0.529
0.445
What is the variance
of...

Consider the following information on returns and probabilities:
State Probability X Z Boom 30% 14% 11% Normal 55% 9% 8% Recession
15% 6% 11% (The portfolio has an investment of $5,500 in asset X
and $4,500 in asset Z)
A. What is the expected return for this portfolio?
B. What is the standard deviation for this portfolio?

The following data represent the probability distribution of the
holding period returns for an investment in Lazy Rapids Kayaks
(LARK) stock.
State of the
Economy
Scenario #(s)
Probability, p(s)
HPR
Boom
1
0.340
33.20%
Normal growth
2
0.420
8.40%
Recession
3
0.24
-19.20%
a. What is the expected return on LARK?
(Round your answer to 2 decimal places.)
Expected
return %
b. What is the standard deviation of the
returns on LARK? (Round your answer to 2 decimal
places.)
Standard deviation...

Consider the following scenario analysis:
Rate of Return
Scenario
Probability
Stocks
Bonds
Recession
0.2
-6%
17%
Normal Economy
0.6
19%
9%
Boom
0.2
30%
5%
1) Is it
reasonable to assume that Treasury bonds will provide higher
returns in recessions that in booms? Yes or No
2)
Calculate the expected rate of return and standard deviation for
each investment
Expected Rate of Return
Standard Deviation
Stocks
%
%
Bonds
%
%
3) Which
investment would you prefer? And how would...

Question 3
Stock A has the following returns for various states of the
economy:
State of
the Economy Probability Stock A's Return
Recession 5% -15%
Below Average 25% -2%
Average 40% 9%
Above Average 25% 14%
Boom 5% 15%
Stock A's expected return is:
6.60%
7.35%
8.35%
8.85%
Question 8
The U.S. Treasury Bills are yielding 2.5%. What would be the
expected return of a stock with beta of 1.91, if S&P 500 is
expected to provide a return of...

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