Question

A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...

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 (48%)
Below average 0.2 (8)   
Average 0.3 17  
Above average 0.2 28  
Strong 0.1 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 variation. Round your answer to two decimal places.

Homework Answers

Answer #1

expected return=Respective return*Respective probabilities

=(0.2*-48)+(0.2*-8)+(0.3*17)+(0.2*28)+(0.1*71)=6.6%

Probability Return Probability*(REturn-mean)^2
0.2 -48 0.2*(-48-6.6)^2=596.232
0.2 -8 0.2*(-8-6.6)^2=42.632
0.3 17 0.3*(17-6.6)^2=32.448
0.2 28 0.2*(28-6.6)^2=91.592
0.1 71 0.1*(71-6.6)^2=414.736
Total=1177.64

SD=[Total Probability*(REturn-mean)^2/Total Probability]^(1/2)
which is equal to

=34.32%(Approx)

CV=SD/mean

=(34.32/6.6)=5.20(Approx).

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 -22% Below average 0.3 -14 Average 0.3 13 Above average 0.2 34 Strong 0.1 62 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 two decimal...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 (32%) Below average 0.1 (9) Average 0.3 10 Above average 0.1 27 Strong 0.3 45 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...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 (38%) 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 intermediate calculations. Round your answer to two decimal places. % Calculate the stock's coefficient of variation. Round...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 (38%) Below average 0.1 (14)    Average 0.3 14   Above average 0.2 38   Strong 0.2 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 variation. Round...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 0.2 (11) Average 0.3 11 Above average 0.1 24 Strong 0.3 54 1.0 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. Stock's expected return: % Standard deviation: %...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 (24%) Below average 0.1 (13)    Average 0.3 12    Above average 0.3 29    Strong 0.2 48    1.0 Assume the risk-free rate is 3%. 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. Stock's expected return:   % Standard deviation:   % Coefficient of...
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 (28%) Below average 0.3 (9)    Average 0.3 12   Above average 0.2 28   Strong 0.1 67   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....
A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...
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 (36%) Below average 0.1 (7)    Average 0.3 18   Above average 0.2 27   Strong 0.2 48   1.0 Assume the risk-free rate is 3%. 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. Stock's expected return:   % Standard deviation:   % Coefficient of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT