Question

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

Answer #1

State of economy | Probability of state | Returns | Expected return | ||||||||

a | b | c=a*b | |||||||||

Economic | 14% | -5.2% | -0.73% | ||||||||

Steady | 44% | 2.2% | 0.97% | ||||||||

Boom | (Balancing) | 42% | 10.5% | 4.41% | |||||||

Total |
100% |
4.65% |
|||||||||

Thus, | |||||||||||

Expected return on stock is 4.65% |
|||||||||||

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 states
Percentage returns
Economic recession
18%
-5.0%
Steady economic growth
49%
5.3%
Boom
Please calculate it
9.7%

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...

Calculate the expected standard deviation on stock:
State of the economy Probability of the states Percentage
returns
Economic recession 23% -5%
Steady economic growth 25% 10%
Boom Please calculate it 14%

Question 2 (1 point)
Calculate the expected standard deviation on stock:
State of the economy
Probability of the states
Percentage returns
Economic recession
21%
2%
Steady economic growth
30%
9%
Boom
Please calculate it
11%
Round the answers to two decimal places in percentage
form

A.
Use the following information on states of the economy and stock
returns to calculate the expected return for Dingaling Telephone:
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places. Omit the "%" sign in your
response.)
State of
Economy
Probability of
State of Economy
Security Return
If State Occurs
Recession
.40
–5.50
%
Normal
.40
11.00
Boom
.20
17.00
B.
Use the following information on states of the economy and stock
returns...

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 .11 –.08 Normal .45 .14 Boom
.44 .29 Calculate the expected return. Multiple Choice 18.18%
17.27% 18.91% 19.09% 2.33%

What is the variance of the expected returns on this stock?
State of the Economy
Probability
Expected Return
Boom
.70
24
%
Recession
.30
6
%
Multiple Choice
48.75%
61.53%
70.03%
68.04%
52.75%

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%

Use the following information on states of the economy and stock
returns to calculate the standard deviation of returns. (Do
not round intermediate calculations. Enter your answer as a percent
rounded to 2 decimal places.)
State of Economy
Probability of
State of Economy
Security
Return
if State Occurs
Recession
0.35
−10.00
%
Normal
0.50
7.00
Boom
0.15
17.00

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