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
jeff jeffy answered 3 years agoRelated 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.
Consider the following possible stock prices in one year for STY stock. Possible Outcome Price Probability...
Consider the following possible stock prices in one year for STY
stock.
Possible Outcome Price Probability
Pessimistic 150 25%
Most likely 220 45%
Optimistic 250 30%
A) If the STY stock is currently trading at $200, What is the
expected return of STY stock? Enter your answer as a percent, do
not include the % sign. Round your final answer to two
decimals.
B) If the STY stock is currently trading at $200, What is the
standard deviation of STY...
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...
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