Question

Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Recession 0.20 0.02 -0.17 Normal 0.60 0.08 0.12 Boom 0.20 0.16 0.35 Required: Given that the expected return for Stock A is 8.400%, calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)

Answer #1

ANS 4.45

State | Probability (P) | STOCK A (X) | (P * X ) | P * (X -Average Return of X)^2 |

Economic Boom | 20% | 2 | 0.4 | 8.1920 |

Economic Growth | 60% | 8 | 4.8 | 0.0960 |

Economic Decline | 20% | 16 | 3.2 | 11.5520 |

Total | TOTAL | 8.4 | 19.8400 | |

Average Return = | (P * X) | |||

8.40% | ||||

VARIANCE = | P * (X -Average Return of X)^2 | |||

19.8400 | ||||

Standard Deviation = | Square root of (P * (X -Average Return of X)^2) | |||

Square root of 19.84 | ||||

4.45421 | ||||

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.10
0.06
-0.18
Normal
0.60
0.08
0.16
Boom
0.30
0.16
0.35
Required:
Given that the expected return for Stock A is 10.200%, calculate
the standard deviation for Stock A. (Do not round your
intermediate calculations.)

Consider the following information: Rate of Return if State
Occurs State of Economy Probability of State of Economy Stock A
Stock B Recession 0.20 0.04 -0.23 Normal 0.70 0.08 0.14 Boom 0.10
0.14 0.35 Required: (a) Calculate the expected return for Stock A.
(Do not round your intermediate calculations.) (b) Calculate the
expected return for Stock B. (Do not round your intermediate
calculations.) (c) Calculate the standard deviation for Stock A.
(Do not round your intermediate calculations.) (d) Calculate the...

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...

Consider the following information: Rate of Return if State
Occurs State of Economy Probability of State of Economy Stock A
Stock B Recession 0.10 0.03 -0.22 Normal 0.60 0.07 0.11 Boom 0.30
0.12 0.34 Required: (a) Calculate the expected return for Stock A.
(Do not round your intermediate calculations.) (b) Calculate the
expected return for Stock B. (Do not round your intermediate
calculations.) (c) Calculate the standard deviation for Stock A.
(Do not round your intermediate calculations.) (d) Calculate the...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.10
0.03
-0.21
Normal
0.60
0.08
0.15
Boom
0.30
0.13
0.32
Required:
(a)
Calculate the expected return for Stock A. (Do not round
your intermediate calculations.)
(b)
Calculate the expected return for Stock B. (Do not round
your intermediate calculations.)
(c)
Calculate the standard deviation for Stock A. (Do not
round your intermediate...

Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.20
0.03
-0.19
Normal
0.60
0.08
0.14
Boom
0.20
0.15
0.35
Required:
(a)
Calculate the expected return for Stock A. (Do not round
your intermediate calculations.)
8.40%
8.19%
10.07%
10.37%
7.49%
(b)
Calculate the expected return for Stock B. (Do not round
your intermediate calculations.)
11.60%
10.00%
13.18%
11.02%
12.06%
(c)
Calculate the standard deviation for Stock...

Consider the following information:
Rate of Return if State Occurs
State of
Economy
Probability of
State of Economy
Stock A
Stock B
Recession
0.10
0.03
-0.18
Normal
0.50
0.08
0.16
Boom
0.40
0.13
0.31
Required:
(a)
Calculate the expected return for Stock A. (Do not round
your intermediate calculations.)
(Click to
select)9.50%7.52%11.22%9.70%8.63%
(b)
Calculate the expected return for Stock B. (Do not round
your intermediate calculations.)
(Click to
select)18.60%9.67%20.53%17.67%19.34%
(c)
Calculate the standard deviation for Stock A....

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.20
0.05
-0.22
Normal
0.50
0.09
0.16
Boom
0.30
0.15
0.33
(c)
Calculate the standard deviation for Stock A. (Do not
round your intermediate calculations.)
A) 3.61%
B) 2.55%
C) 3.79%
D) 3.43%
E) 3.75%
(d)
Calculate the standard deviation for Stock B. (Do not
round your intermediate calculations.)
A) 19.22%
B) 13.59%
C) 21.18%...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.20
0.05
-0.17
Normal
0.50
0.07
0.15
Boom
0.30
0.14
0.33
Required:
(a)
Calculate the expected return for Stock A. (Do not round
your intermediate calculations.)
(Click to
select) 9.05% 8.70% 8.62% 8.69% 9.14%
(b)
Calculate the expected return for Stock B. (Do not round
your intermediate calculations.)
(Click to
select) 14.70% 10.33% 13.30% 14.00% 14.56%
(c)
Calculate the standard deviation for Stock...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Recession
0.10
0.04
-0.20
Normal
0.50
0.07
0.12
Boom
0.40
0.15
0.31
Required:
(a)
Calculate the expected return for Stock A. (Do not round
your intermediate calculations.)
(Click to select)9.90%8.19%11.64%10.37%9.05%
(b)
Calculate the expected return for Stock B. (Do not round
your intermediate calculations.)
(Click to select)16.40%7.67%18.22%15.58%17.06%
(c)
Calculate the standard deviation for Stock...

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