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 | (48%) |

Below average | 0.4 | (7) |

Average | 0.3 | 14 |

Above average | 0.1 | 32 |

Strong | 0.1 | 46 |

1.0 |

Calculate the stock's expected return. Round your answer to two
decimal places.

%

Calculate the stock's standard deviation. Do not round
intermediate calculations. Round your answer to two decimal
places.

%

Calculate the stock's coefficient of variation. Round your answer to two decimal places.

Answer #1

**Expected return**=Respective return*Respective
probability

=(0.1*-48)+(0.4*-7)+(0.3*14)+(0.1*32)+(0.1*46)

=**4.40%**

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

0.1 | -48 | 0.1*(-48-4.4)^2=274.576 |

0.4 | -7 | 0.4*(-7-4.4)^2=51.984 |

0.3 | 14 | 0.3*(14-4.4)^2=27.648 |

0.1 | 32 | 0.1*(32-4.4)^2=76.176 |

0.1 | 46 | 0.1*(46-4.4)^2=173.056 |

Total=603.44% |

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

=**24.57%(Approx).**

**Coefficient of variation=**Standard
deviation/Expected value

=(24.57/4.4)

=**5.58(Approx).**

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stock's expected return. Round your answer to two decimal places. %
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the following distribution:
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Below average
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(8)
Average
0.3
16
Above average
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20
Strong
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53
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Demand for the
Company's Products
Probability of This
Demand Occurring
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This Demand Occurs
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0.1
(40%)
Below average
0.4
(10)
Average
0.3
10
Above average
0.1
37
Strong
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48
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ratio. Do not round intermediate calculations. Round your answers
to two decimal places.
Stock's expected return: %
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Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.2
(48%)
Below average
0.2
(8)
Average
0.3
17
Above average
0.2
28
Strong
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71
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Calculate the stock's expected return. Round your answer to two
decimal places.
%
Calculate the stock's standard deviation. Do not round
intermediate calculations. Round your answer to two decimal
places.
%
Calculate the stock's coefficient of variation. Round...

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Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(36%)
Below average
0.4
(8)
Average
0.3
15
Above average
0.1
25
Strong
0.1
60
1.0
a. Calculate the stock's expected return. Round your answer to
two decimal places.
_______%
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intermediate calculations. Round your answer to two decimal
places.
_______%
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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
0.2
(8)
Average
0.3
11
Above average
0.3
40
Strong
0.1
74
1.0
Calculate the stock's
expected return. Round your answer to two decimal places.
%
Calculate the stock's
standard deviation. Do not round intermediate calculations. Round
your answer to two decimal places.
%
Calculate the stock's
coefficient of variation. Round...

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Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return If
This Demand Occurs
Weak
0.1
(24%)
Below average
0.3
(10)
Average
0.3
14
Above average
0.1
32
Strong
0.2
66
1.0
Calculate the stock's expected return. Round your answer to two
decimal places.
%
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intermediate calculations. Round your answer to two decimal
places.
%
Calculate the stock's coefficient of...

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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
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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.
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