Probability 0.1 0.2 0.1 0.6 Return 1 John is watching an old game show rerun on television called Let's Make a Deal in which the contestant chooses a prize behind one of two curtains. Behind one of the curtains is a gag prize worth 220, and behind the other is a round-the-world trip worth $9,200. The game show has placed a subliminal message on the curtain containing the gag prize, which makes the probability of choosing the gag prize equal to 75 percent. Boom Good Level Slump 25.00% 15.00% 10.00% 5.00% 2 The distribution of grades in an introductory finance class is normally distributed, with an expected grade of 65. If the standard deviation of grades is 5, in what range would you expect 68 percent of the grades to fall? (Round answer to 2 decimal places, e.g.15.25) What is the expected return on Barbara's investment? (Round answer to 3 decimal places, e.g. 0.076.) 3 Given the returns and probabilitics for the three possible states listed below, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 8.70 percent and 14.00 percent, respectively. (Round answer to 4 decimal places, e.g. 0.0768) Expected return What is the standard deviation of the return on Barbara's investment? (Round intermediate calculations and answer to 5 decimal places, e.g. 0.07680.) Good Ok Poor 0.32 0.30 0.10 -0.25 0.50 0.10 0.30 Standard deviation Show Work is REQUIRED for this question:Qaen Show Work 0.22 4 The CAPM predicts that the return of MggoBusks Tea Corp, is 23.6 percent. If the risk-free rate of return is 8 percent and the expected return on the market is 20 percent, then what is MooBGk beta? (Round answer to 2 decimal places, e.g. 12.75.) Stocks A, B, and C have expected returns of 16 percent, 16 percent, and 14 percent, respectively while their standard deviations are 46 percent, 25 percent, and 25 percent, respectively. If you weroe considering the purchase of eoch of these stocks as the only holding in your portfolio and the risk-free rate is 0 percent, which stock should you choose? (Hint: the Coefficient of Variation (CV) measures the risk of an investment for each 1% of expected return; in other words, the higher the CV, the greater the risk.) (Round answer to 2 decimal places,e.g. 15.25.) Coefficlent of variation of Stock A Coefficient of variation of Stock B Coefficient of variation of Stock C Stock BStock CStock A Barbara is considering investing in a stock and is aware that the returm on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment. Using the table of returns and probabilities below, find