# Question: B J Gautney Enterprises is evaluating a security One year Treasury

B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 2.9 percent. Calculate the following investment’s expected return and its standard deviation. Should Gautney invest in this security?

Probability Return

.15 ....... 23%

.30 ....... 2%

.40 ....... 4%

.15 ....... 6%

Probability Return

.15 ....... 23%

.30 ....... 2%

.40 ....... 4%

.15 ....... 6%

**View Solution:**## Answer to relevant Questions

Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on risk (as measured by the standard deviation) andreturn?Calculate the standard deviation in the anticipated returns found in Problem8–1.Consider the following stock returns for B&A Trucking, Inc. and the market index:Use the visual method described in figure to estimate the beta for B&A. Is the firm more or less risky than the market portfolio?Explain.Breckenridge, Inc., has a beta of .85. If the expected market return is 10.5 percent and the risk-free rate is 3.5 percent, what is the appropriate expected return of Breckenridge (using the CAPM)?Anita, Inc. is considering the following investments. The current rate on Treasury bills is 4.5 percent, and the expected return for the market is 11 percent. Using the CAPM, what rates of return should Anita require for ...Post your question