Question

Syntex Ltd is considering an investment in one of two ordinary shares. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return?

Share A |
Share B |
||||

Probability |
Return |
Probability |
Return |
||

0.35 |
13% |
0.15 |
−4% |
||

0.30 |
16% |
0.35 |
55% |
||

0.35 |
20% |
0.35 |
13% |
||

0.15 |
20% |

a. Given the information in the table, the expected rate of return for share A is

____%.

(Round to two decimal places.)The standard deviation of share A is

____%.

(Round to two decimal places.)b. The expected rate of return for share B is

_____%.

(Round to two decimal places.)The standard deviation for share B is

_____%.

(Round to two decimal places.)

c. Based on the risk (as measured by the standard deviation) and return of each share, which investment is better?

Answer #1

Syntex, Inc. is considering an investment in one of two common
stocks. Given the information that follows, which investment is
better, based on the risk (as measured by the standard deviation)
and return?
Common Stock A
Common Stock B
Probability
Return
Probability
Return
0.35
12%
0.25
-4%
0.3
14%
0.25
5%
0.35
21%
0.25
15%
0.25
20%
Given the information in the table, the expected rate of return
for stock A is??

Question 7: Smith Inc. is considering an
investment in one of two common stocks. Given the following
information, which investment is better, based on the risk (as
measured by the standard deviation) and return of each? (Please
calculate the expected rate of return of each investment and its
corresponding standard deviation)
Common Stock A:
Probability Return
0.30 10%
0.40 16%
0.30 18%
Common Stock B:
Probability Return
0.20 -
4%
0.30 6%
0.30 13%
0.20 21%

After a tumultuous period in the stock market, Logan Morgan is
considering an investment in one of two portfolios. Given the
information that follows, which investment is better, based on
risk (as measured by the standard deviation) and return as
measured by the expected rate of return?
Portfolio A
Portfolio B
Probability
Return
Probability
Return
0.15
−3%
0.08
4%
0.50
17%
0.28
10%
0.35
23%
0.42
11%
0.22
15%
a. What is the expected rate of return and standard deviation...

(Expected rate of return and risk) Syntex, Inc. is
considering an investment in one of two common stocks. Given the
information that follows, which investment is better, based on
the risk (as measured by the standard deviation) and return?
Common Stock A
Common Stock B
Probability
Return
Probability
Return
0.20
13%
0.25
−4%
0.60
16%
0.25
8%
0.20
18%
0.25
15%
0.25
23%
a. Given the information in the table, the expected rate of
return for stock A is...

Ibrahim is considering investing in two shares. Their expected
returns and associated probabilities are given below:
State of
Economy
Probability
Returns Returns
A%
B%
Bad
0.10
(20)
30
Normal
0.60
10
20
Good
0.30
70
50
Required
Calculate the expected returns and standard deviation of
A? (10marks)
Calculate the expected returns and standard deviation of B?
10marks)
Frafraha ltd is expected to pay an end of year dividend of GHȼ
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You are considering two stocks and have determined the following
information:
Stock A Return Probability of the Return 30 % 10 % 15 50 13
40
Stock B Return Probability of the Return 34 % 25 % 17 15 6
60
Which of the two stocks has the higher expected return? Round
your answers to two decimal places.
The return on Stock A: 15.7 %
The return on Stock B: 14.65 % Stock A has the higher expected
return.
Which...

You are considering a marginal investment in a small company,
XYZ. You hold a very well diversified portfolio of large cap US
stocks. The expected return on XYZ is 28%, the expected return on
the market is 20%. XYZ has a beta of 1.3, a standard deviation of
0.35, and a residual standard deviation of 0.15. The riskless rate
is 2%.
What is XYZ’s alpha? State your answer with two digits after the
decimal. For example, 4.55 represents 4.55%.
For...

Problem 8-07
You are considering two stocks and have determined the following
information:
Stock A
Return
Probability of the Return
21
%
20
%
15
20
5
60
Stock B
Return
Probability of the Return
23
%
20
%
14
20
9
60
Which of the two stocks has the higher expected return? Round
your answers to two decimal places.
The return on Stock A: %
The return on Stock B: %
-Does Stock A or Stock B 3 have the higher...

Quantitative Problem: You are given the following probability
distribution for CHC Enterprises:
State of Economy Probability Rate of return
Strong 0.15 20%
Normal 0.5 9
Weak 0.35 -4
What is the stock's expected return? Round your answer to 2
decimal places. Do not round intermediate calculations. 6.10 %
What is the stock's standard deviation? Round your answer to two
decimal places. Do not round intermediate calculations. %
What is the stock's coefficient of variation? Round your answer
to two decimal...

Normal probability distribution Assuming that the rates of
return associated with a given asset investment are normally
distributed; that the expected return,
r,
is
12.3%;
and that the coefficient of variation,
CV,
is
1.11,
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%.
a. The standard deviation of returns,
σr,
is
13.65313.653%.
(Round to three decimal places.)b....

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