Stocks X and Y have the following probability distributions of expected future returns: a. Calculate the expected
Question:
Stocks X and Y have the following probability distributions of expected future returns:
a. Calculate the expected rate of return for Stock Y, rY (rX = 12%).
b. Calculate the standard deviation of expected returns for Stock X(σY = 20.35%). Also, calculate the coefficient of variation for Stock Y. Is it possible that most investors might regard Stock Y as being less risky than Stock X?Explain.
Transcribed Image Text:
Probability -10% -35% 12
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 71% (7 reviews)
a b If Stock Y is less highly correlate...View the full answer
Answered By
Abdul majid awais
Hi everyone! I am Abdul Majid Awais.
Experienced Accounting and Finance Professional.
General Ledger Accounting
System Implementation
Financial Statement Generation
Cost Account & Margin Analysis
Financial Planning
Financial Modeling
Writing business plans
Management/Team Building
Extensive software experience, including Microsoft suite (Excel and Access), SAP, Quickbooks.
I'm looking forward to hearing all about you and what makes your business unique!
0.00
0 Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Corporate Finance questions
-
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.4 (12%) (25%) 0.2 2 0 0.2 12 19 0.1 22 28 0.1 30 50 Calculate the expected rate of return, ,...
-
Stocks A and B have the following probability distributions of expected future returns: a. Calculate the expected rate of return, r ' B , for Stock B (r ' A = 12%). b. Calculate the standard...
-
Stocks R and S have the following probability distributions of returns: a. Calculate the expected return for each stock. b. Calculate the expected return of a portfolio consisting of 50 percent of...
-
Air flows through the fine mesh gauze shown in the figure below with an average velocity of 1.50 m/s in the pipe. Determine the loss coefficient for the gauze. KL= i 8.1mm V = 1.5 m/s Water Gauze...
-
A 3-m level rod was calibrated and its graduated scale was found to be uniformly expanded so that the distance between its 0 and 3.000 marks was actually 3.006 m. How will this affect elevations...
-
The frequency response of a stable LTI system is known to be real and even. Is the inverse system stable?
-
Identify treatments and experimental units in the following scenarios. a. City A would like to evaluate whether a new employment training program for the unemployed is more effective compared to the...
-
An automobile accident causes both the driver and passenger front airbags to deploy. (a) If the vehicle was traveling at a speed of 88.6 km/h and is now at rest, find the change in momentum for both...
-
Many people dislike or fear certain products and would not 'demand' them at any price. How might a health-care marketer manage the negative demand for such products as colon-cancer screenings?
-
The Global Sourcing Wire Harness Decision Sheila Austin, a buyer at Autolink, a Detroit-based producer of subassemblies for the automotive market, has sent out requests for quotations for a wiring...
-
Currently, the risk-free return is 3 percent and the expected market rate of return is 10 percent. What is the expected return of the following three-stock portfolio? Amount Invested Beta $400,000...
-
Terry recently invested equal amounts in five stocks to form an investment portfolio, which has a beta equal to 1.2that is, P = 1.2. Terry is considering selling the riskiest stock in the portfolio,...
-
In problem use the RK4 method with h = 0.1 to obtain a four-decimal approximation of the indicated value. y' = x + y 2 , y(0) = 0; y(0.5)
-
Describe how to integrate the visual tool you found it into a stakeholder analysis. Also, show how to create a template of stakeholder analysis for a project including an example of the visual tool...
-
At its core, lean deals with the reduction of waste. In the OM context, we typically attempt to reduce inventories, waste from production, and other types of waste more generally. Respond to the...
-
1. What would be the key logistics activities for Ford that would allow it to improve its situation? Describe them 2. What are the decision factors that would allow the distribution process to be...
-
1. How are project management and consulting engagement management the same or different? In two paragraphs or less, please describe two ways they are similar and two ways they are different. 2. In...
-
Research an organization that practices Global Sourcing. Explain if the organization is successful What are the Global Sourcing best practices based on your research? provide details for your...
-
Kindness House Hospice is a 30bed facility that provides care for patients nearing the end of their life. Recent surveys of patient family members have indicated that perception of the quality of...
-
Clark, PA, has been engaged to perform the audit of Kent Ltd.s financial statements for the current year. Clark is about to commence auditing Kents employee pension expense. Her preliminary enquiries...
-
True or False: Based on the principles of engineering economic analysis, you should bet on the horse with the lowest odds to win, because risk and returns tend to be positively correlated.
-
Westland Manufacturing spends $20,000 to update the lighting in its factory to more energy-efficient LED fixtures. This will save the company $4,000 per year in electricity costs. The company...
-
The IRR method assumes that ________. a. Cash flows are reinvested at the firms cost of attracting funds when they are received b. Cash flows of a project are never reinvested c. Cash flows are...
-
How would the numbers in your Excel spreadsheet change because of the COVID-19 pandemic? Create an NPV profile for Tokyos Olympic Games given the changes that were caused by the pandemic.
-
Use the information below to answer the questions that follow. U.S. $ EQUIVALENT U.K. pound () 1.5939 Canada dollar (Can$) 1.0091 a. Which would you rather have, $100 or 100? CURRENCY PER U.S. $...
-
What are the molecular mechanisms underlying cellular respiration, and how do they facilitate the conversion of chemical energy stored in organic molecules into adenosine triphosphate (ATP) for...
-
How can advancements in respiratory diagnostics, imaging modalities, and pulmonary rehabilitation techniques enhance our understanding of respiratory pathophysiology and improve clinical management...
Study smarter with the SolutionInn App