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 1 year agoRelated Solutions
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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
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.109
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Normal
.108
.155
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.080
.240
Assume each state of the economy is equally likely to happen.
Calculate the expected return of each stock. (Do not round
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to 2 decimal places, e.g., 32.16.)
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Stock A
%
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Calculate the standard deviation of each stock. (Do...
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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
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State of economy
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-0.15
Normal
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0.07
Boom
--
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Enter return in percents, not in decimals.
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State of economy...
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Probability of
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Return on
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.20
−.030
.024
Normal
.55
.128
.052
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.25
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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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State of Economy
Probability of
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Return
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Recession
.35
−10.00
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Normal
.50
7.00
Boom
.15
17.00
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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.)
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Probability of
State of Economy
Security Return
If State Occurs
Recession
0.4
-11
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Normal
0.2
16
Boom
?
23
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Price
Dividend
0
50.72
1
43.54...
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