Question

Question 1: An investment has the following possible outcomes: State of the Economy Probability Return rapid...

Question 1: An investment has the following possible outcomes:

State of the Economy

Probability

Return

rapid growth

0.05

100%

Modest growth

0.45

56 %

Continued recession

0.45

78 %,

Falls into depression

0.05

-100%
  1. What is your estimate of the expected rate of returns from this investment opportunity?
  2. Would you be interested in making such an investment? Why?
  3. What is the standard deviation in the anticipated returns?
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
  James Fromholtz is considering whether to invest in a newly formed investment fund. The​ fund's investment...
  James Fromholtz is considering whether to invest in a newly formed investment fund. The​ fund's investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the​ fund's performance will hinge on how the national economy performs in the coming year. ​ Specifically, he suggested the following possible​ outcomes: State of Economy Probability Fund Returns Rapid expansion and recovery 5​% 100​% Modest growth 35​% 30​% Continued recession...
James Fromholtz is considering whether to invest in a newly formed investment fund. The​ fund's investment...
James Fromholtz is considering whether to invest in a newly formed investment fund. The​ fund's investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the​ fund's performance will hinge on how the national economy performs in the coming year. ​ Specifically, he suggested the following possible​ outcomes: James has estimated the expected rate of return from this investment is 18.00 percent. James wants to apply...
P13-6 Calculating Expected Return [LO1] Consider the following information:      State of Economy Probability of State...
P13-6 Calculating Expected Return [LO1] Consider the following information:      State of Economy Probability of State of Economy Rate of Return if State Occurs   Recession 0.11 -0.02   Normal 0.45 0.16   Boom 0.44 0.24    Required: Calculate the expected return.
Question 1 a. Calculate the expected return on stock of Gamma Inc.: State of the economy...
Question 1 a. Calculate the expected return on stock of Gamma Inc.: State of the economy Probability of the states Percentage returns Economic recession 28% -7.4% Steady economic growth     35% 2.2% Boom Please calculate it 14.6% Round the answers to two decimal places in percentage form. b. Calculate the expected standard deviation on stock: State of the economy Probability of the states Percentage returns Economic recession              18% 2% Steady economic growth 22% 8% Boom Please calculate it 14%
Calculate the expected return on stock of Gamma Inc.: State of the economy Probability of the...
Calculate the expected return on stock of Gamma Inc.: State of the economy Probability of the states Percentage returns Economic recession 18% -5.0% Steady economic growth     49% 5.3% Boom Please calculate it 9.7%
Calculate the expected return on stock Gamma Inc.: State of the economy Probability of the States...
Calculate the expected return on stock Gamma Inc.: State of the economy Probability of the States percentage returns Economic recession 14% -5.2% Steady economic growth 44% 2.2% Boom please calculate it 10.5% Round answer to two decimal places in percentage form
Consider the following information: Rate of Return If State Occurs State of Probability of Economy State...
Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Recession 0.16 0.05 − 0.16 Normal 0.62 0.08 0.13 Boom 0.22 0.13 0.30 Calculate the expected return for the two stocks. (Round your answers to 2 decimal places. (e.g., 32.16)) Expected return Stock A % Stock B % Calculate the standard deviation for the two stocks. I know that Expected Return for Stock A is 8.62% , Expected...
Problem 10-24 Expected Return and Risk (LG10-1) Following are four economic states, their likelihoods, and the...
Problem 10-24 Expected Return and Risk (LG10-1) Following are four economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast growth 0.22 66 % Slow growth 0.55 26 Recession 0.18 −19 Depression 0.05 −53 Compute the expected return and standard deviation.
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 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...
Question 1 (1 point) a. Calculate the expected return on stock of Gamma Inc.: State of...
Question 1 (1 point) a. Calculate the expected return on stock of Gamma Inc.: State of the economy Probability of the states Percentage returns Economic recession 15% -5.2% Steady economic growth     30% 2.7% Boom Please calculate it 13.3% Round the answers to two decimal places in percentage form. b. Calculate the expected standard deviation on stock: State of the economy Probability of the states Percentage returns Economic recession              26% -10% Steady economic growth 28% 10% Boom Please calculate it...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT