Consider the following Table: R(BOA) R(WF) 28% 26% 24% 25% -6% 23% 20% YEAR 2018 2019...

  

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Consider the following Table: R(BOA) R(WF) 28% 26% 24% 25% -6% 23% 20% YEAR 2018 2019 2020 2021 2022 -9% 21% 26% R(M) Probability 32% 0.14 29% 0.16 - 2% 0.20 31% 0.15 35% 0.35 Calculate the following relationships: 1. The Expected Returns for BOA, WF and the Market, respectively. 2. The Variances of the Returns for BOA, WF and the Market, respectively. 3. The Standard Deviations of the Returns for BOA, WF and the Market, respectively. 4. The Covariances of the Returns of BOA, WF and the Market respectively. 5. The betas of the BOA and WF respectively. Are they Aggressive or Defensive? 6. The Coefficients of Variation for BOA, WF and the Market, respectively. 7.Draw the Normal Distribution Curves for BOA and WF and carefully explain your answers. 8. ASSUME that the risk-free rate is 5%. Calculate the CAPM MODEL associated with the BOA and WF respectively. 9. Calculate the Risk Premium. Consider the following Table: R(BOA) R(WF) 28% 26% 24% 25% -6% 23% 20% YEAR 2018 2019 2020 2021 2022 -9% 21% 26% R(M) Probability 32% 0.14 29% 0.16 - 2% 0.20 31% 0.15 35% 0.35 Calculate the following relationships: 1. The Expected Returns for BOA, WF and the Market, respectively. 2. The Variances of the Returns for BOA, WF and the Market, respectively. 3. The Standard Deviations of the Returns for BOA, WF and the Market, respectively. 4. The Covariances of the Returns of BOA, WF and the Market respectively. 5. The betas of the BOA and WF respectively. Are they Aggressive or Defensive? 6. The Coefficients of Variation for BOA, WF and the Market, respectively. 7.Draw the Normal Distribution Curves for BOA and WF and carefully explain your answers. 8. ASSUME that the risk-free rate is 5%. Calculate the CAPM MODEL associated with the BOA and WF respectively. 9. Calculate the Risk Premium.

Answer rating: 100% (QA)

Solution The table provides the returns for Bank of America BOA Wells Fargo WF and the broader market M for the years 2018 2019 2020 and 2022 The probabilities of each return are also given To answer ... View the full answer