Question

Expected Return: Discrete Distribution

A stock's return has the following distribution:

Demand for theCompany's Products |
Probability of ThisDemand Occurring |
Rate of Return if ThisDemand Occurs (%) |
||

Weak | 0.1 | -50% | ||

Below average | 0.2 | -6 | ||

Average | 0.4 | 9 | ||

Above average | 0.2 | 30 | ||

Strong | 0.1 | 75 | ||

1.0 |

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

%

Calculate the standard deviation. Round your answer to two
decimal places.

%

Answer #1

stock expected return = sum of (porbability* return)

=> (0.10*-0.5) + (0.20*-0.06) + (0.40*0.09) + (0.20*0.30) + (0.10*0.75)

=>(-0.05) + (-0.012) + (0.036) + (0.06)+ (0.075)

=>0.109

=>10.9%.

standard deviation;

sum of [probability * ( return -expected return)]^(1/2)

=>[[(0.10)*(-0.50-0.109)^2]+[(0.20)*(-0.06-0.109)^2]+[0.40*(0.09-0.109)]+[0.20*(0.30-0.109)^2]+[0.10*(0.75-0.109)^2]^(1/2)

=>[0.10*(0.370881)+0.20*(0.028561)+0.40*(0.000361)+0.20*(0.036481)+0.10*0.410881]^(1/2)

=>[0.091329]^(1/2)

=>0.3022

=>30.22%.

Expected Return: Discrete Distribution
A stock's return has 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
0.2
-5
Average
0.4
15
Above average
0.2
30
Strong
0.1
50
1.0
Calculate the stock's expected return. Round your answer to two
decimal places.
%
Calculate the standard deviation. Round your answer to two
decimal places.
%

Expected Return: Discrete Distribution A stock's return has the
following distribution:
Demand for the Company's Products Weak Below Average Average
Above Average Strong
Probability of This Demand Occurring 0.1 5 0.4 0.2 0.1
Rate of Return if This Demand Occurs (%) -45% -5% 14% 40%
60%
Calculate the stock's expected return. Round your answer to two
decimal places. % Calculate the standard deviation. Round your
answer to two decimal places. %

Problem 6-05 Expected Return: Discrete Distribution A stock's
return has the following distribution: Demand for the Company's
Products Probability of This Demand Occurring Rate of Return if
This Demand Occurs (%) Weak 0.1 -30% Below average 0.2 -8 Average
0.4 15 Above average 0.2 35 Strong 0.1 75 1.0 Calculate the stock's
expected return. Round your answer to two decimal places. %
Calculate the standard deviation. Round your answer to two decimal
places. %

Expected Return: Discrete Distribution
A stock's return has the following distribution:
Demand for the
Company's Products
Probability of This
Demand Occurring
Rate of Return if This
Demand Occurs (%)
Weak
0.1
-30
%
Below average
0.2
-10
Average
0.4
16
Above average
0.2
35
Strong
0.1
65
1.0
Calculate the stock’s expected return and standard deviation. Do
not round intermediate calculations. Round your answers to two
decimal places.
Expected return: %
Standard deviation: %

EXPECTED RETURN
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
0.2
(9)
Average
0.4
15
Above average
0.1
28
Strong
0.2
71
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...

EXPECTED RETURN
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
0.2
(24%)
Below average
0.2
(12)
Average
0.4
16
Above average
0.1
22
Strong
0.1
70
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...

EXPECTED RETURN
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 0.2 (34%)
Below average 0.1 (12)
Average 0.4 16
Above average 0.2 40
Strong 0.1 47
1.0
A.Calculate the stock's expected return. Round your answer to
two decimal places.
%
B.Calculate the stock's standard deviation. Do not round
intermediate calculations. Round your answer to two decimal
places.
%
C. Calculate the stock's...

EXPECTED RETURN 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 0.2 (44%) Below
average 0.2 (5) Average 0.3 15 Above average 0.1 30 Strong 0.2 75
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...

Expected return
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
0.2
-9
Average
0.5
13
Above average
0.1
37
Strong
0.1
73
1.0
Calculate the stock's expected return. Round your answer to two
decimal places.
%
Calculate the stock's standard deviation. Round your answer to
two decimal places.
%
Calculate the stock's coefficient of variation. Round your
answer to...

Expected return
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
-46%
Below average
0.3
-10
Average
0.4
17
Above average
0.1
39
Strong
0.1
59
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...

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