Question

1) 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 | (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.

_______%

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

_______%

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

_______%

Answer #1

a.Expected Return=Respective Return*Respective Probability

=(0.1*-36)+(0.4*-8)+(0.3*15)+(0.1*25)+(0.1*60)

**=6.2%**

**b.**

Probability | Return | Probability*(Return-Expected Return)^2 |

0.1 | -36 | 0.1*(-36-6.2)^2=178.084 |

0.4 | -8 | 0.4*(-8-6.2)^2=80.656 |

0.3 | 15 | 0.3*(15-6.2)^2=23.232 |

0.1 | 25 | 0.1*(25-6.2)^2=35.344 |

0.1 | 60 | 0.1*(60-6.2)^2=289.444 |

Total=606.76% |

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

=(606.76)^(1/2)

which is equal to

=**24.63%(Approx)**

**Coefficient of variation=**Standard
Deviation/Expected Return

=(24.63/6.2)

which is equal to

=**3.97(Approx).**

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
(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...

1. 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
(36%)
Below average
0.2
(9)
Average
0.3
17
Above average
0.3
39
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.
%
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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
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Strong
0.1
74
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Calculate the stock's
expected return. Round your answer to two decimal places.
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standard deviation. Do not round intermediate calculations. Round
your answer to two decimal places.
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the Company's Products Probability of This Demand Occurring Rate of
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Below average 0.1 (15)
Average 0.3 13
Above average 0.1 37
Strong 0.3 51
1.0
Calculate the stock's expected return. Round your answer to two
decimal places. %
Calculate the stock's standard deviation. Do not round
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%
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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
-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.
%
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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
(38%)
Below average
0.2
(15)
Average
0.3
12
Above average
0.3
36
Strong
0.1
61
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