Question

q 26 The rate of return on the common stock of a company is expected to be 13.75% in a boom economy, 8.75% in a normal economy, and only 3.25% in a recessionary economy. The probabilities of these economic states are 31.0% for a boom, 48.0% for a normal economy, and 21.0% for a recession. What is the variance of the returns on the common stock of the company?

Answer #1

Expected return=Respective return*Respective probability

=(0.31*13.75)+(0.48*8.75)+(0.21*3.25)=9.145%

probability | Return | probability*(Return-Expected Return)^2 |

0.31 | 13.75 | 0.31*(13.75-9.145)^2=6.57386775 |

0.48 | 8.75 | 0.48*(8.75-9.145)^2=0.074892 |

0.21 | 3.25 | 0.21*(3.25-9.145)^2=7.29771525 |

Total=13.946475% |

Standard deviation=[Total probability*(Return-Expected Return)^2/Total probability]^(1/2)

=(13.946475)^(1/2)

=3.73%(Approx)

Variance=Standard deviation^2

**=0.0013946475**

The rate of return on the common stock of a company is expected
to be 13.75% in a boom economy, 8.75% in a normal economy, and only
3.25% in a recessionary economy. The probabilities of these
economic states are 31.0% for a boom, 48.0% for a normal economy,
and 21.0% for a recession. What is the variance of the returns on
the common stock of the company?
0.001255
0.001290
0.001325
0.001360
0.001395

The rate of return on the common stock of a company is expected
to be 11.25% in a boom economy, 6.25% in a normal economy, and only
0.75% in a recessionary economy. The probabilities of these
economic states are 21.0% for a boom, 68.0% for a normal economy,
and 11.0% for a recession. What is the variance of the returns on
the common stock of the company?
Question 4 options:
0.000754
0.000775
0.000796
0.000817
0.000838

The rate of return on the common stock of a company is expected
to be 15.50% in a boom economy, 10.50% in a normal economy, and
only 5.00% in a recessionary economy. The probabilities of these
economic states are 38.0% for a boom, 34.0% for a normal economy,
and 28.0% for a recession. What is the variance of the returns on
the common stock of the company?

The rate of return on the common stock of a company is expected
to be 13.25% in a boom economy, 8.25% in a normal economy, and only
2.75% in a recessionary economy. The probabilities of these
economic states are 29.0% for a boom, 52.0% for a normal economy,
and 19.0% for a recession. What is the variance of the returns on
the common stock of the company?

The rate of return on the common stock of a company is expected
to be 12.75% in a boom economy, 7.75% in a normal economy, and only
2.25% in a recessionary economy. The probabilities of these
economic states are 27.0% for a boom, 56.0% for a normal economy,
and 17.0% for a recession. What is the variance of the returns on
the common stock of the company?

The rate of return on the common stock of a company is expected
to be 11.75% in a boom economy, 6.75% in a normal economy, and only
1.25% in a recessionary economy. The probabilities of these
economic states are 23.0% for a boom, 64.0% for a normal economy,
and 13.0% for a recession. What is the variance of the returns on
the common stock of the company? 0.000878 0.000902 0.000926
0.000949 0.000973

The rate of return on the common stock of a company is expected
to be 14.25% in a boom economy, 9.25% in a normal economy, and only
3.75% in a recessionary economy. The probabilities of these
economic states are 33.0% for a boom, 44.0% for a normal economy,
and 23.0% for a recession. What is the variance of the returns on
the common stock of the company?
Question 11 options:
0.001393
0.001431
0.001468
0.001506
0.001544

The rate of return on the common stock of Flowers by Flo is
expected to be 14% in a boom economy, 8% in a normal economy, and
only 2% in a recessionary economy. The probabilities of these
economic states are 20% for a boom, 70% for a normal economy, and
10% for a recession. What is the variance of the returns on the
common stock of Flowers by Flo?
Multiple Choice
.001280
.001044
.001863
.002001
.002471

The rate of return on the common stock of Lancaster Woolens is
expected to be 18 percent in a boom economy, 8 percent in a normal
economy, and only 2 percent in a recessionary economy. The
probabilities of these economic states are 12 percent for a boom
and 10 percent for a recession. What is the expected risk on this
common stock? [3 points] a. 0.01150 b. 0.01306 c. 0.12345 d.
0.001389 e. 0.001421

Leftover stock is expected to return 26 percent in a boom, 4
percentin a normal economy, and lose 25 percent in a recession. The
probabilities of a boom, normal economy, and a recession are 2
percent, 93 percent, and 5 percent, respectively.
What is the expected return on this stock?
a.3.99 percent
b. 2.99 percent
c. 1.99 percent
d.0.99percent
What is the variance on this stock?
a. 0.005071
b. 0.004927
c.0.003896
d.0.005001
What is the standard deviation of the returns...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 10 minutes ago

asked 28 minutes ago

asked 30 minutes ago

asked 45 minutes ago

asked 57 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago