Question

In: Finance

You expect the following set of possible outcomes for a stock: Outcome Probability Ending Stock Price...

You expect the following set of possible outcomes for a stock:

Outcome Probability Ending Stock Price

Holding Period Return

(Percent)

Risk-free rate

(Percent)
Good 35% $120 44.5 4
Neutral 30% $100 14 2
Bad 35% $70 -16.5 .5

What is the variance of the risk-free rate? Please enter your answer rounded to the third decimal place.

Solutions

Expert Solution

Working

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You expect the following set of possible outcomes for a stock: Outcome Probability Ending Stock Price...
You expect the following set of possible outcomes for a stock: Outcome Probability Ending Stock Price Holding Period Return (Percent) Risk-free rate (Percent) Good 35% $120 44.5 4 Neutral 30% $100 14 2 Bad 35% $70 -16.5 .5 What is the covariance of the stock holding period returns with the stock's ending price? Please enter your answer rounded to the third decimal place.
Suppose you are holding stock A and there are three possible outcomes. Outcome 1 happens with...
Suppose you are holding stock A and there are three possible outcomes. Outcome 1 happens with 20% probability and -20% return. Outcome 2 happens with 40% probability and 20 return. Outcome 3 happens with 40% probability and 50% return. What is the Sharpe Ratio of stock A? 0.931 1.473 0.246 0.325
You are considering investing in a project with the following possible outcomes:      Probability of Investment States...
You are considering investing in a project with the following possible outcomes:      Probability of Investment States    Occurrence Returns State 1: Economic boom 20% 16% State 2: Economic growth       40% 12% State 3: Economic decline       20% 5% State 4: Depression        20% -5% Calculate the standard deviation of returns for this investment. Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type...
Assume that the following probability distribution exists for automobile damages Possible Outcomes for Damages Probability $0...
Assume that the following probability distribution exists for automobile damages Possible Outcomes for Damages Probability $0 50% 600 30% 2,000 10% 7,000 6% 11,000 4% What is the expected value for damages? A. $12.40 B. $124 C. 1,240 D. 12,400 Can someone please explain how you got the answer. I'm stuck
The probability distribution shows the probability of each possible outcome, zero through 15. That is, if...
The probability distribution shows the probability of each possible outcome, zero through 15. That is, if you were to ask a total of 15 people to sample both Coke and Pepsi, the probability distribution you have created will show you the chance that any specific number of people will guess correctly. Print out the distribution and then respond manually to the following questions: 1. Is the distribution collectively exhaustive? What is the evidence for your answer?
The probability distribution shows the probability of each possible outcome, zero through 15. That is, if...
The probability distribution shows the probability of each possible outcome, zero through 15. That is, if you were to ask a total of 15 people to sample both Coke and Pepsi, the probability distribution you have created will show you the chance that any specific number of people will guess correctly. Print out the distribution and then respond manually to the following questions: 1. What is the mean of this probability distribution? That is, what is the most likely outcome?
The probability distribution shows the probability of each possible outcome, zero through 15. That is, if...
The probability distribution shows the probability of each possible outcome, zero through 15. That is, if you were to ask a total of 15 people to sample both Coke and Pepsi, the probability distribution you have created will show you the chance that any specific number of people will guess correctly. Print out the distribution and then respond manually to the following questions What is the probability that 10 or more will identify correctly?
Part 1. When a probability experiment only has two possible outcomes and you know the probability...
Part 1. When a probability experiment only has two possible outcomes and you know the probability of one outcome, you can find the probability of the other outcome by computing (the complementary probability, using the addition rule, using the multiplication rule) To find the probability of two (mutually exclusive, independent) events both occurring, you may simply multiply their individual probabilities. When two scenarios are (mutually exclusive, independent) , we can simply add their probabilities together to find the probability that...
The current price of a non-dividend-paying stock is $32.59 and you expect the stock price to...
The current price of a non-dividend-paying stock is $32.59 and you expect the stock price to either go up by a factor of 1.397 or down by a factor of 0.716 over the next 0.7 years. A European put option on the stock has a strike price of $33 and expires in 0.7 years. The risk-free rate is 3% (annual, continuously compounded). Part 1. What is the option payoff if the stock price goes down? Part 2. What is the...
The current price of a non-dividend-paying stock is $266.72 and you expect the stock price to...
The current price of a non-dividend-paying stock is $266.72 and you expect the stock price to be either $293.39 or $242.47 after 0.5 years. A European call option on the stock has a strike price of $270 and expires in 0.5 years. The risk-free rate is 3% (EAR). Part 1. What is the hedge ratio (delta)? Part 2. How much money do you need to invest in riskless bonds to create a portfolio that replicates the payoff from one call...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT