Question

Integrative—Expected return, standard​ deviation, and coefficient of variation   An asset is currently being considered by Perth...

Integrative—Expected return, standard​ deviation, and coefficient of variation   An asset is currently being considered by Perth Industries. The probability distribution of expected returns for this asset is shown in the following​ table,

1   0.05   35.00%
2   0.25   20.00%
3   0.55   5.00%
4   0.05   0.00%
5   0.10   -5.00%

a.  Calculate the expected value of​ return, for the asset.

b. Calculate the standard​ deviation​,for the​ asset's returns.

c. Calculate the coefficient of​ variation, CV​,for the​ asset's returns.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

rate possible .. let me know if you need any clarification..

i ii iii=i*ii iv=i*(ii-9%)^2
SL # Probability ii Expected return Variance
1 0.05 35.00% 1.75% 0.34%
2 0.25 20.00% 5.00% 0.30%
3 0.55 5.00% 2.75% 0.09%
4 0.05 0.00% 0.00% 0.04%
5 0.1 -5.00% -0.50% 0.20%
9.00% 0.97%
Variance = 0.97%
SD =square root of variance = 9.82%
Therefore answer as below-
ans a) Expected return = 9.00%
ans b) SD= 9.82%
ans c) CV= SD/Mean                                            1.09
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Integrative—Expected return, standard​ deviation, and coefficient of variation   An asset is currently being considered by Perth...
Integrative—Expected return, standard​ deviation, and coefficient of variation   An asset is currently being considered by Perth Industries. The probability distribution of expected returns for this asset is shown in the following​ table, j Pr ​Return, r 1    0.05 15.00​% 2 0.15 5.00​% 3 0.70                 0.00​% 4 0.05 −5.00​% 5 0.05 −10.00​% . a.Calculate the expected value of​ return, r​, for the asset. b. Calculate the standard​ deviation, for the​ asset's returns. c. Calculate the coefficient of​ variation, CV​,...
Calculate Expected Rate of Return, variance, standard deviation, and coefficient variation. I am unsure of how...
Calculate Expected Rate of Return, variance, standard deviation, and coefficient variation. I am unsure of how to solve this problem Outcomes:    Probability Return Better than Expected:    0.15 0.45 As Expected: 0.55 0.2 Worse than Expected:    0.25    0.05 Poor:    0.05    -0.25
Calculate the expected return, standard deviation, and coefficient of variation for the following probability distribution. Probability(%)...
Calculate the expected return, standard deviation, and coefficient of variation for the following probability distribution. Probability(%) Return(%) 10 12 25 18 45 20 20 -8   
Exercise Calculate the expected return, variance, standard deviation and coefficient of variation for the following stock:...
Exercise Calculate the expected return, variance, standard deviation and coefficient of variation for the following stock: Demand for Company’s Products Probability of this outcome Return if this occurs Weak .1 -50% Below Average .2 -5% Average .4 16% Above Average .2 25% Strong .1 60% 1.0
Calculate the coefficients of variation for the following stocks: Stock Expected return Standard deviation of return...
Calculate the coefficients of variation for the following stocks: Stock Expected return Standard deviation of return 1 0.065 0.29 2 0.04 0.17 3 0.15 0.24 1. What is the coefficient of variation for stock 1? 2.What is the coefficient of variation for stock 2? 3. What is the coefficient of variation for stock 3? 4. If you want to get the best risk-to-reward trade-off, which stock should you buy?
You have the following assets available to you to invest in: Asset Expected Return Standard Deviation...
You have the following assets available to you to invest in: Asset Expected Return Standard Deviation Risky debt 6% 0.25 Equity 10% .60 Riskless debt 4.5% 0 The coefficient of correlation between the returns on the risky debt and equity is 0.72 2D. Hector has a coefficient of risk aversion of 1.8. What percentage of his assets should he invest in the risky portfolio? 2E. What would the expected return be on Hector’s portfolio? 2F. What would the standard deviation...
Normal probability distribution   Assuming that the rates of return associated with a given asset investment are...
Normal probability distribution   Assuming that the rates of return associated with a given asset investment are normally​ distributed; that the expected​ return, r​, is 16.7​%; and that the coefficient of​ variation, CV​, is 1.06​, answer the following​ questions: a.  Find the standard deviation of​ returns, σr. b.  Calculate the range of expected return outcomes associated with the following probabilities of​ occurrence: (1)​ 68%, (2)​ 95%, (3)​ 99%.
Given the following information: Expected return of Stock A .12 (12%) Standard Deviation of A's Return...
Given the following information: Expected return of Stock A .12 (12%) Standard Deviation of A's Return 1 Expected return on stock B .2 (20%) Standard Deviation of B's return 6 Correlation Coefficient of the returns on stock A & stock B -.6 (this is not the covariance, it is the CC) If as an investor I chose to invest 75% of my funds into stock A, and 25% into stock B, what is the measure of my coefficient of variation...
Asset Expected Return Standard Deviation Risky debt 6% 0.25 Equity 10% .60 Riskless debt 4.5% 0...
Asset Expected Return Standard Deviation Risky debt 6% 0.25 Equity 10% .60 Riskless debt 4.5% 0 The coefficient of correlation between the returns on the risky debt and equity is 0.72 2A. Using the Markowitz portfolio optimization method, what would the composition of the optimal risky portfolio of these assets be? 10 points 2B. What would the expected return be on this optimal portfolio? 2 points 2C. What would the standard deviation of this optimal portfolio be? 3 points
Asset Expected Return Standard Deviation Risky debt 6% 0.25 Equity 10% .60 Riskless debt 4.5% 0...
Asset Expected Return Standard Deviation Risky debt 6% 0.25 Equity 10% .60 Riskless debt 4.5% 0 The coefficient of correlation between the returns on the risky debt and equity is 0.72 2A. Using the Markowitz portfolio optimization method, what would the composition of the optimal risky portfolio of these assets be? Please show work
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT