Question

You are analyzing an investment opportunity and collecting three returns from the past 3 years: 0.34%, 18.64%, -3.14%. Risk free rate is 0.8% (=0.0080). What is the downside risk?

**Please round your answer to the fourth decimal. For
example, 0.1234.**

Answer #1

Computation of Downside Risk

We have given the returns for the past three years for an investment as:

0.34% , 18.64% , -3.14%

Also, we have been given the Risk Free Rate as 0.8%

Thus, In order to calculate the downside risk, we have to
consider the returns which are below the *risk free rate of 0.8%
ie.: 0.34%, -3.14%*

We will calculate the standard deviation of the 0.34% & -3.14%

*Downside risk is +2.46%*

Consider the following returns for two investments, A and B,
over the past four years:
Investment 1:
6%
17%
-4%
15%
Investment 2:
3%
12%
-9%
15%
a. Calculate the mean for each investment.
(Round your answers to 2 decimal
places.)
Investment 1
%
Investment 2
%
a.1. Which investment provides the higher
return?
Investment 2
Investment 1
b. Calculate the standard deviation for each
investment. (Round your answers to 2
decimal places.)
Investment 1 SD
%
Investment...

You are a research analyst at JPMorgan Investment Management.
You are collecting and analyzing data to find the value for a six
month European call option and put option on BAC stock. The stock
price of BAC is currently $80. The strike price is $78. It is known
that at the end of six months it will be either $84 or $76. The
risk-free interest rate is 5% per year.
Please choose all correct answers. Please note that each
incorrect...

A stock had returns of 21.70% (1 year ago), 2.40% (2 years ago),
X (3 years ago), and ‑14.60% (4 years ago) in each of the past 4
years. Over the past 4 years, the geometric average annual return
for the stock was 2.85%. Three years ago, inflation was 3.62% and
the risk-free rate was 4.47%. What was the real return for the
stock 3 years ago? Answer as a rate in decimal format so
that 12.34% would be entered as...

You are a research analyst at JPMorgan Investment Management.
You are collecting and analyzing data to find the value for a six
month European call option and put option on BAC stock. The stock
price of BAC is currently $80. The strike price is $78. It is known
that at the end of six months it will be either $84 or $76. The
risk-free interest rate is 5% per year.
Please choose all correct answers.
1.
The value of the...

You’ve observed the following returns on Barnett Corporation’s
stock over the past five years: –29.1 percent, 16.4 percent, 35.8
percent, 3.7 percent, and 22.7 percent. The average inflation rate
over this period was 3.37 percent and the average T-bill rate over
the period was 4.3 percent. What was the average real risk-free
rate over this time period? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.) Average real risk-free rate...

You’ve observed the following returns on Barnett Corporation’s
stock over the past five years: –28.5 percent, 16 percent, 35
percent, 3.5 percent, and 22.5 percent. The average inflation rate
over this period was 3.35 percent and the average T-bill rate over
the period was 4.3 percent.
What was the average real risk-free rate over this time period?
(Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g.,
32.16.)
Average real risk-free rate...

You’ve observed the following returns on SkyNet Data
Corporation’s stock over the past five years: 12 percent, –9
percent, 20 percent, 17 percent, and 10 percent. Suppose the
average inflation rate over this period was 3.2 percent and the
average T-bill rate over the period was 4.9 percent. What was the
average real risk-free rate over this time period? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.) What was...

You’ve observed the following returns on Yasmin Corporation’s
stock over the past five years: 14 percent, –7 percent, 17 percent,
15 percent, and 10 percent. Suppose the average inflation rate over
this period was 1.4 percent and the average T-bill rate over the
period was 5.1 percent.
What was the average real risk-free rate over this time period?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places, e.g.,
32.16.)
Average real risk-free rate ...

You’ve observed the following returns on Crash-n-Burn Computer’s
stock over the past five years: 20 percent, –12 percent, 17
percent, 20 percent, and 10 percent. Suppose the average inflation
rate over this period was 1.7 percent and the average T-bill rate
over the period was 4.6 percent.
What was the average real risk-free rate over this time period?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places, e.g.,
32.16.)
Average real
risk-free rate...

You’ve observed the following returns on Crash-n-Burn Computer’s
stock over the past five years: 20 percent, –12 percent, 17
percent, 20 percent, and 10 percent. Suppose the average inflation
rate over this period was 1.7 percent and the average T-bill rate
over the period was 4.6 percent.
What was the average real risk-free rate over this time period?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places, e.g.,
32.16.)
Average real
risk-free rate...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 1 minute ago

asked 7 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 12 minutes ago

asked 12 minutes ago