Calculate the expected standard deviation on stock: State of the economy probability of the states percentage...

Calculate the expected standard deviation on stock:

State of the economy	probability of the states	percentage returns
Economic recession	16%	5%
Steady economy	39%	9%
Boom	Please calculate it	18%

Round the answers to two decimal places in percentage form.

Solutions

Expert Solution

Expected Return = [0.16(0.05) + 0.39(0.09) + 0.45(0.18)]

Expected Return = 0.1241

Standard Deviation = [(0.16(0.05 - 0.1241)² + 0.39(0.09 - 0.1241)² + 0.45(0.18 - 0.1241)²]^1/2

Standard Deviation = 5.23%

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

state of the economy probability of occurrence expected return on stock A expected return on stock...

state of the economy probability of occurrence expected return on stock A expected return on stock B High growth 0.1 60% 5% Moderate growth 0.2 20% 20% No growth 0.5 10% 5% Recession 0.2 -25% 0% 1)Calculate the weighted average of the standard deviation of individual stocks A and B ; and show that each portfolio standard deviation is less than this weighted average except the portfolio standard deviation with correlation of 1. 2) Given correlation of -1, what portfolio...

Use the following table of states of the economy and stock returns to calculate the expected...

Use the following table of states of the economy and stock returns to calculate the expected return on a portfolio of 50 percent Roten and the rest in Bradley. Security if State Returns Occurs Prob of State of Economy Roten Bradley Bust 0.3 -7% 31% Boom ? 49 13

Calculate the expected return based on the information in the table below State of economy Probability...

Calculate the expected return based on the information in the table below State of economy Probability of state of economy Rate of return if state occurs Recession .30 -.07 Normal .60 .13 Boom .10 .23

Use the following information on states of the economy and stock returns to calculate the standard...

Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) State of Economy Probability of State of Economy Security Return if State Occurs Recession .35 −10.00 % Normal .50 7.00 Boom .15 17.00

Expected return and standard deviation. Use the following information to answer the questions. State of Economy...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset R in State Return on Asset S in State Return on Asset T in State Boom 0.29 0.035 0.300 0.470 Growth 0.36 0.035 0.140 0.330 Stagnant 0.21 0.035 0.180 0.035 Recession 0.14 0.035 −0.035 −0.160 a. What is the expected return of each asset? b. What are the variance and the standard deviation of each asset? c. What...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset J in State Return on Asset K in State Return on Asset L in State Boom 0.24 0.055 0.210 0.290 Growth 0.38 0.055 0.130 0.190 Stagnant 0.22 0.055 0.030 0.070 Recession 0.16 0.055 −0.090 −0.220 a. What is the expected return of each asset? b. What is the variance and the standard deviation of each asset? c. What...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset R in State Return on Asset S in State Return on Asset T in State Boom 0.29 0.020 0.300 0.450 Growth 0.38 0.020 0.140 0.300 Stagnant 0.22 0.020 0.170 0.015 Recession 0.11 0.020 −0.030 −0.165 a. What is the expected return of each asset? b. What are the variance and the standard deviation of each asset? c. What...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset J in State Return on Asset K in State Return on Asset L in State Boom 0.25 0.065 0.230 0.260 Growth 0.36 0.065 0.140 0.210 Stagnant 0.23 0.065 0.065 0.055 Recession 0.16 0.065 -0.080 −0.210 a. What is the expected return of asset J? _____ (Round to four decimal places.) What is the expected return of asset K?...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset A in State Return on Asset B in State Return on Asset C in State Boom 0.34 0.02 0.22 0.35 Normal 0.52 0.02 0.09 0.23 Recession 0.14 0.02 −0.02 −0.21 a. What is the expected return of each asset? b. What is the variance of each asset? c. What is the standard deviation of each asset? Hint: Make...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy...

Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset D in State Return on Asset E in State Return on Asset F in State Boom 0.34 0.07 0.29 0.17 Normal 0.54 0.07 0.19 0.13 Recession 0.12 0.07 −0.24 −0.05 a. What is the expected return of each asset? b. What is the variance of each asset? c. What is the standard deviation of each asset?

Subjects