Question

A stock's returns have the following distribution:

Demand for theCompany's Products |
Probability of ThisDemand Occurring |
Rate of Return IfThis Demand Occurs |

Weak | 0.1 | (46%) |

Below average | 0.4 | (8) |

Average | 0.3 | 16 |

Above average | 0.1 | 20 |

Strong | 0.1 | 53 |

1.0 |

Assume the risk-free rate is 3%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places.

Stock's expected return: %

Standard deviation: %

Coefficient of variation:

Sharpe ratio:

Answer #1

1.

Expected returns=Sum(probability*returns)

=0.1*(-46%)+0.4*(-8%)+0.3*16%+0.1*20%+0.1*53%=4.300%

2.

Standard deviation=Sqrt(Sum(probability*(returns-expected
returns)^2))

=sqrt(0.1*(-46%-4.300%)^2+0.4*(-8%-4.300%)^2+0.3*(16%-4.300%)^2+0.1*(20%-4.300%)^2+0.1*(53%-4.300%)^2)

=24.828%

3.

Coefficient of variation=Standard deviation/Expected
returns=24.828%/4.300%

=5.773953488

4.

=(Expected returns-risk free rate)/Standard deviation

=(4.300%-3%)/24.828%

=0.052360238

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(26%)
Below average
0.2
(14)
Average
0.3
18
Above average
0.3
30
Strong
0.1
53
1.0
Assume the risk-free rate is 4%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(32%)
Below average
0.2
(13)
Average
0.3
14
Above average
0.3
39
Strong
0.1
53
1.0
Assume the risk-free rate is 2%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(26%)
Below average
0.2
(14)
Average
0.3
13
Above average
0.3
29
Strong
0.1
46
1.0
Assume the risk-free rate is 2%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %_____
Standard deviation: %______
Coefficient of...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(50%)
Below average
0.1
(10)
Average
0.4
13
Above average
0.3
26
Strong
0.1
65
1.0
Assume the risk-free rate is 4%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(40%)
Below average
0.4
(10)
Average
0.3
10
Above average
0.1
37
Strong
0.1
48
1.0
Assume the risk-free rate is 3%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(38%)
Below average
0.3
(9)
Average
0.4
15
Above average
0.1
21
Strong
0.1
71
1.0
Assume the risk-free rate is 4%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: _____ %
Standard deviation:...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(44%)
Below average
0.1
(12)
Average
0.4
12
Above average
0.3
30
Strong
0.1
58
1.0
Assume the risk-free rate is 4%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(34%)
Below average
0.1
(15)
Average
0.4
13
Above average
0.3
23
Strong
0.1
62
1.0
Assume the risk-free rate is 3%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(38%)
Below average
0.1
(13)
Average
0.4
12
Above average
0.3
30
Strong
0.1
62
1.0
Assume the risk-free rate is 3%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of...

A stock's returns have the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(44%)
Below average
0.1
(15)
Average
0.4
18
Above average
0.3
39
Strong
0.1
58
1.0
Assume the risk-free rate is 2%. Calculate the stock's expected
return, standard deviation, coefficient of variation, and Sharpe
ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of...

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