Question
In: Finance
Given the following information about a stock's return in the various states of the economy, calculate...
Given the following information about a stock's return in the various states of the economy, calculate the standard deviation of its return. USE EXCEL AND SHOW FORMULAS THAT WERE USED. Enter answer in percents
| State of economy | Probability | Stock return |
|---|---|---|
| Recession | 0.17 | -0.26 |
| Normal | 0.34 | 0.08 |
| Boom | -- | 0.18 |
Solutions
Expert Solution
Probability(boom) = 1 - Probability (recession) - Probability (normal)
= 0.49
E6 = E3+E4+E5
standard deviation of return
of stocks = 0.1916
These are screenshots of one single excel sheet and formulas have been shown with the help of notations.
jeff jeffy answered 3 years agoRelated Solutions
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You are given the following information:
State of
Economy
Return on
Stock A
Return on
Stock B
Bear
.119
−.062
Normal
.098
.165
Bull
.090
.250
Assume each state of the economy is equally likely to
happen.
Calculate the expected return of each of the following stocks.
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g.,
32.16.)
Expected return
Stock A
%
Stock B...
You are given the following information: State of Economy Return on Stock A Return on...
You are given the following information:
State of
Economy
Return on
Stock A
Return on
Stock B
Bear
.119
−.062
Normal
.098
.165
Bull
.090
.250
Assume each state of the economy is equally likely to
happen.
Calculate the expected return of each of the following stocks.
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g.,
32.16.)
Expected return
Stock A
%
Stock B...
Stock A is expected to produce the following returns given various states of the economy: Table...
Stock A is expected to produce the following returns given
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Table 1 - Stock A
State of Economy
Probability of state of Economy
Possible Return
Good
70%
20%
Bad
30%
12%
Table 2 - Stock B and Stock C
Stock
Expected Return
Standard Deviation
Correlation Coefficient with A
B
25%
15%
0.8
C
18%
12%
-0.2
1) What is the expected return of stock A?
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State of
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Return on
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Return on
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Bear
.109
−
.052
Normal
.108
.155
Bull
.080
.240
Assume each state of the economy is equally likely to happen.
Calculate the expected return of each stock. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
Expected return
Stock A
%
Stock B
%
Calculate the standard deviation of each stock. (Do...
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State of
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.024
Normal
.55
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.052
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.25
.208
.082
Calculate the expected return for each of the stocks.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places (e.g.,
32.16).)
Expected return
Stock J
%
Stock K
%
Calculate the standard deviation for each of...
Q1/Calculate the expected return for a stock, given the following information about its returns in different...
Q1/Calculate the expected return for a stock, given the
following information about its returns in different states of the
economy.
State of economy
Probability
Stock return
Recession
0.16
-0.15
Normal
0.43
0.07
Boom
--
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Enter return in percents, not in decimals.
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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
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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
Use the following information on states of the economy and stock returns to calculate the expected...
Use the following information on states of the economy and stock
returns to calculate the expected return for Dingaling Telephone:
(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
0.4
-11
%
Normal
0.2
16
Boom
?
23
Given the following price and dividend information, calculate the arithmetic average return, the geometric average return,...
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holding period return, the $1 invested equivalent, the probability
of losing money, the upper bound to the 95th confidence interval,
the lower bound to the 99th confidence interval, the lower bound to
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round to 4 decimals)
Year
Price
Dividend
0
50.72
1
43.54...
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