Question: 8% Problem #1 (7 Marks) Consider the following historical returns on ROM shares. Assume the average risk-free rate during the 2014-2018 period was equal to

8% Problem #1 (7 Marks) Consider the following historical returns on ROM shares. Assume the average risk-free rate during the 2014-2018 period was equal to 1.5%. Year ROM Return 2018 6% 2017 2016 10% 2015 25% 2014 -8% a) Calculate the arithmetic average return and the risk premium for ROM. (2 marks) b) Calculate the geometric average return for ROM. (2 marks) c) Calculate the standard deviation for ROM using the arithmetic average return

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Consider the following historical returns on ROM shares. Assume the average risk-free rate during the 2014-2018 period was equal to 1.5%. Year 2018 2017 2016 2015 2014 ROM Return 6% 8% 10% 25% -8% a)...

Problem 1 (15 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2015-2019 period was equal to 3%. Annual return (%) Year Investment A...

Problem 1 Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment...

Problem 1 (12 marks) Consider the following two potential investments Nexit and Rexit. You plan to invest 8,000 KD in investment Nexit and 12,000 KD in investment Rexit. Date Return Nexit Return...

i need help in this finace assignment Problem #1 (7 marks) A stock had returns of 5 percent, 16 percent, -18 percent, and 11 percent for the past four years. Based on this information what is the 99...

Partial Question 6 3.7 / 5.55 pts Stocks A and B have the following historical returns: Year Stock A's Returns Stock B's Returns 2015 (24.25%) 5.50% 2016 18.50 26.73 2017 38.67 48.25 2018 14.33...

Hey man, i need help with 2 assignments, and they are due tomorrow at 5 pm. can you help me ? Assignment 3 Instructions Assignment 3 should be submitted after you have completed Unit 5. This...

Consider the two (excess return) index-model regression results for stocks A and B. The risk-free rate over the period was 6%, and the markets average return was 14%. Performance is measured using an...

Problem 1 (10 marks) Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8% paid annually, and a face value of $1,000. Each year you reinvested...

PORTPOLIO MANAGEMENT CASE I The balance sheet and profit and loss account of GNL Limited for the year 20 x 5 are given below Balance Sheet, GNL Limited (Rs. in million) 20X4 20X5 Liabilities and...

Using the following information taken from the hypothetical 2011 balance sheet and 2010 income statement for Loblaw Companies Ltd., develop a strategic profit model. (Figures are in $000.) You can...

Do you consider job evaluation to be an art or a science? Please explain.

Consider the following information: \ table [ [ State of , \ table [ [ Probability of ] , [ State of Economy ] ] , Stock A , Rate of Return if State Occurs, ] , [ Economy , . 1 8 , . 3 5 9 , Stock B...

Agreements to procure insurance to back up an anti - indemnity provision: always remain in force if the indemnity clause is found invalid. are generally not invalidated by anti - indemnity...

What other tests would you suggest to Lisa, and why would you suggest them?

Choose a position with which you are familiar, such as a counterperson at a McDonalds restaurant, and describe how you would create a selection process for it similar to those in this feature.

How would you suggest they measure the effectiveness of their recruiting efforts?