2. Measuring stand-alone risk using realized (historical) data Returns earned over a given time period are...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
2. Measuring stand-alone risk using realized (historical) data Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Falcon Freight Inc. (FF): Five years of realized returns for FF are given in the following table. Remember: 1. While FF was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for FF for 2014 to 2018 are: 2014 Stock returni 7.50% 5.10% 2015 2016 9.00% 12.60% 2017 2018 3.90% a sample the universe Given the preceding data, the average on FF's stock is 7.62% the population The preceding data series represents, returns is a sample of FF's historical returns. Based on this conclusion, the standard deviation of FF's historical If investors expect the average realized return from 2014 to 2018 on FF's stock to continue into the future, its coefficient of variation (CV) will be 2. Measuring stand-alone risk using realized (historical) data Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Falcon Freight Inc. (FF): Five years of realized returns for FF are given in the following table. Remember: 1. While FF was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for FF for 2014 to 2018 are: 2014 Stock returni 7.50% 5.10% 2015 2016 9.00% 12.60% 2017 2018 3.90% a sample the universe Given the preceding data, the average on FF's stock is 7.62% the population The preceding data series represents, returns is a sample of FF's historical returns. Based on this conclusion, the standard deviation of FF's historical If investors expect the average realized return from 2014 to 2018 on FF's stock to continue into the future, its coefficient of variation (CV) will be
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
A three-dimensional elasticity problem of a uniform bar stretched under its own weight gives the following strain field: where A and B are constants. Integrate the strainedisplacement relations to...
-
Lee Garrett sells security systems for Guardsman Security Co. Garrett has a monthly sales quota of $40,000. If Garrett exceeds this quota, he is awarded a bonus. In measuring the quota, a sale is...
-
Stillwater Designs rebuilds defective units of its S12L7 Kicker speaker model. During the year, Stillwater rebuilt 7,500 units. Materials and labor standards for performing the repairs are as...
-
What level of financial acumen is adequate for a board member? Why?
-
Clovis Supply sells two models of saddles to retail outfittersbasic and custom. Basic saddles sell for $1,000 each and custom saddles sell for $1,500. The variable cost of a basic saddle is $600 and...
-
This is tne30009 lab 1 1. What command is needed on the tunnel server to accept tunnelled messages on port 8080 and send them to port 23 on the local host? Include the IP addresses that you used. 2....
-
odd. Write a program to find whether a number is even or
-
municipal bond has a coupon rate of 6.10 percent and a YTM of 5.71 percent. If an investor has a marginal tax rate of 30 percent, what is the equivalent pretax yield on a taxable bond? 2.Myca...
-
Nina buys a call option on Pandora that has a strike price of $1000 and an expiry in 1 year. The premium she pays for the option is $50. When the option expires the price of Pandora is $1060.00. (All...
-
write three pages on the role of the government in economic growth from WWII until the 1970s. What were the causes of economic growth? What are the benefits of economic growth write a detailed note...
-
Company: ShareCare What is the value proposition? Company: Genomind What is the revenue model? How does it disrupt the healthcare business enviroment? NO PAPER WORK ONLY TYPED ANSWERS ASAP
-
What types of economic policies have been shown to promote social mobility, and which policies tend to exacerbate social stratification ?
-
Which one of the following 1 point substances will not have H- bonding as one of its IMF? * II IV H H H H CH3-C- CH, 0-0-H CH,-C-0-H N-N -C-N H H H H H O IV II II O v
-
Distinguish among total-moisture content, free-moisture content, equilibrium-moisture content, unbound moisture, and bound moisture.
-
As the staff accountant at Diablo Manufacturing, you have been asked to prepare the journal entries associated with a recently completed custom order (#720). You have the following information from...
-
Sanchez Consulting applies overhead to consulting projects based on the direct labor hours charged by employees to each job. Selected data for the firm follow: What is the amount of over- or...
-
Given the following data for Scurry Company, what is the cost of goods sold? a. $500,000. c. $800,000. b. $600,000. d. $950,000. Beginning inventory of finished goods Cost of goods manufactured...
Study smarter with the SolutionInn App