Question: - Calculate the expected return and return standard deviation for Stock B on p.5 in your handout4 in the module. It is Example 3. I

- Calculate the expected return and return standard deviation for Stock B on p.5 in your handout4 in the module. It is Example 3. I would like you to work on your own before you check the answers in the notes. Please scan your homework or take a picture of it and upload it.

Example 3.

States of the Economy

(1)

Prob.

(2)

Return on Stock B (R_B)

(3)

(4)=(2)*(3)

Error

(5)=(3)-E(R)

Error²

(6)=(5)²

(7)=(6)*(2)

Booming (Good)

30%

15%

Normal

40%

10%

Recession

(Bad)

30%

E(R_b) =

E(error²) = VAR(R_B)=

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!

Calculate the expected return and return standard deviation for Stock B on p.5 in your handout4 in the module. It is Example 3. I would like you to work on your own before you check the answers in...

Consider the following information on Stocks X and Y: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock X Stock Y Recession 0.24 0.065 0.29 Normal 0.69 0.365 0.21...

You can use either Excel or manually calculate returns, standard deviations, covariance, and correlation coefficient using the formulas illustrated on Power Point slides. However, you need to show...

You can use either Excel or manually calculate returns, standard deviations, covariance, and correlation coefficient using the formulas illustrated on PowerPoint slides. However, you need to show the...

Please show work and formulas in Excel Based on the following data; State of the Economy Probability Stock A Rate of Return Recession 0.2 -5% Low Growth 0.3 10% Normal Growth 0.5 20% Calculate the...

Remaining Time: 42 minutes, 46 seconds. Question Completion Status: raup QUESTION 25 XYZ Inc. has an investment portfolio consisting of two stocks: Stock A (8% expected return and 4% standard...

Given the following information: State Probability Stock 1 Stock 2 Boom .25 5% 30% Normal .40 7% 18% Recession .35 11% -17% a. Calculate the expected return and the standard deviation for Stock 1 and...

G iven the following information : State Probability Stock 1 Stock 2 Boom . 2 5 5 % 3 0% Normal . 4 0 7 % 18 % Recession . 3 5 1 1 % -17 % a. Calculate the expected return and the standard deviation...

Company ABC has an investment in stock D and E. Stock E doesn't pay dividends while stock D pays dividends frequently. The prices of stock D and E for the last 5 years, also the dividend of stock D...

All the classes in the above class diagram are entity classes. Add at least four boundary and four control classes to the class diagram. Redraw the class diagram- your diagram can include all classes...

A national fast food restaurant chain has recently made the decision that their breakfast menu will now be available all day long. The product management team overseeing the breakfast lines including...

If assets are $ 4 2 8 , 0 0 0 and liabilities are $ 2 0 2 , 0 0 0 , then equity equals: Mulliple Choice $ 6 3 0 , 0 0 0 . $ 4 2 8 , 0 0 0 . $ 1 , 0 5 8 . 0 0 0 . $ 2 0 2 , 0 0 0 . $ 2 2 6 , 0 0 0 .

The most common form of business ownership in the U . S . is a: a .

LAST WORD Suppose Winter Sportsa hypothetical French retailer of snowboardswants to order 5000 snowboards made in the United States. The price per board is $200, the present exchange rate is 1 euro ...

Exports pay for imports. Yet in 2005 the nations of the world exported about $724 billion more worth of goods and services to the United States than they imported from the United States. Resolve the...

KEY QUESTION Diagram a market in which the equilibrium dollar price of 1 unit of fictitious currency zee (Z) is $5 (the exchange rate is $5 Z1). Then show on your diagram a decline in the demand for...