Question
In: Finance
Consider the following probability distributions for stocks A and B: State Probability Return on A Return...
Consider the following probability distributions for stocks A and B:
| State | Probability | Return on A | Return on B |
| 1 | .3 | 7% | -9% |
| 2 | .5 | 11% | 14% |
| 3 | .2 | -16% | 26% |
What is the standard deviation of returns for stock A? Please give your answer in percent rounded to the nearest basis point.
What is the standard deviation of returns for stock B? Please give your answer in percent rounded to the nearest basis point.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Consider the following probability distributions for stocks A and B: State Probability Return on A Return...
Consider the following probability distributions for stocks A
and B:
State
Probability
Return on A
Return on B
1
.3
7%
-9%
2
.5
11%
14%
3
.2
-16%
26%
a) What is the standard deviation of returns for stock A? Please
give your answer in percent rounded to the nearest basis point.
b) What is the standard deviation of returns for stock B? Please
give your answer in percent rounded to the nearest basis point.
Consider the following probability distributions for stocks A and B: State Probability Return on A Return...
Consider the following probability distributions for stocks A
and B:
State
Probability
Return on A
Return on B
1
.3
7%
-9%
2
.5
11%
14%
3
.2
-16%
26%
A. What is the correlation between stocks A and B? Please give
your answer in decimal form rounded to the third decimal place.
B. What is the standard deviation of returns for stock A? Please
give your answer in percent rounded to the nearest basis point.
C. What is the...
Consider the following probability distribution for stocks A and B: State Probability Return on A Return...
Consider the following probability distribution for stocks A and
B:
State
Probability
Return on A
Return on B
1
.15
8%
8%
2
.2
13%
7%
3
.15
12%
6%
4
.3
14%
9%
5
.2
16%
11%
If you invest 35% of your portfolio in stock A, and the rest
(65%) in stock B, what would be your portfolio's standard
deviation? Please enter your answer in percent rounded to the
nearest basis point.
Consider the following probability distribution for stocks A and B: State Probability Return on Stock A...
Consider the following probability distribution for stocks A and
B:
State
Probability
Return on Stock A
Return on Stock B
1
0.10
10
%
8
%
2
0.20
13
%
7
%
3
0.20
12
%
6
%
4
0.30
14
%
9
%
5
0.20
15
%
8
%
Let G be the global minimum variance portfolio. The weights of A
and B in G are ________ and ________, respectively.
Consider the following probability distribution for stocks A and B. Scenario Probability Return on Stock A...
Consider the following probability distribution for stocks A and
B.
Scenario
Probability
Return on Stock A
Return on Stock B
1
.35
12%
-15%
2
.4
4%
5%
3
.25
-4%
25%
1. What are the expected returns and standard deviations for
stocks A and B?
2. What is the correlation coefficient between the two
stocks?
3. Suppose the risk-free rate is 2%. What is the optimal risky
portfolio, its expected return and its standard deviation?
4. Suppose that stocks...
Stocks A and B have the following probability distributions of expected future returns: Probability A B...
Stocks A and B have the following probability distributions of
expected future returns:
Probability
A
B
0.2
(7%)
(37%)
0.2
4
0
0.2
13
19
0.3
18
27
0.1
38
48
Calculate the expected rate of return, , for Stock B ( =
11.20%.) Do not round intermediate calculations. Round your answer
to two decimal places.
%
Calculate the standard deviation of expected returns,
σA, for Stock A (σB = 26.62%.) Do not round
intermediate calculations. Round your answer to...
Stocks A and B have the following probability distributions of expected future returns: Probability A B...
Stocks A and B have the following probability distributions of
expected future returns:
Probability
A
B
0.3
(15%)
(30%)
0.2
3
0
0.2
11
20
0.1
24
26
0.2
33
40
Calculate the expected rate of return, , for Stock B ( = 7.30%.)
Do not round intermediate calculations. Round your answer to two
decimal places.
%
Calculate the standard deviation of expected returns,
σA, for Stock A (σB = 26.58%.) Do not round
intermediate calculations. Round your answer to...
Stocks A and B have the following probability distributions of expected future returns: Probability A B...
Stocks A and B have the following probability distributions of
expected future returns:
Probability
A
B
0.1
(9
%)
(30
%)
0.2
6
0
0.5
12
22
0.1
21
26
0.1
32
47
Calculate the expected rate of return, , for Stock B
( = 11.60%.) Do not round intermediate calculations. Round your
answer to two decimal places.
%
Calculate the standard deviation of expected returns,
σA, for Stock A (σB = 19.66%.) Do not round
intermediate calculations. Round your answer...
Stocks A and B have the following probability distributions of expected future returns: Probability A B...
Stocks A and B have the following probability distributions of
expected future returns:
Probability
A
B
0.1
(7
%)
(35
%)
0.2
3
0
0.5
13
18
0.1
20
25
0.1
29
44
Calculate the expected rate of return, , for Stock B ( =
11.30%.) Do not round intermediate calculations. Round your answer
to two decimal places.
%
Calculate the standard deviation of expected returns,
σA, for Stock A (σB = 19.67%.) Do not round
intermediate calculations. Round your...
Stocks A and B have the following probability distributions of expected future returns: Probability A B...
Stocks A and B have the following probability distributions of
expected future returns:
Probability
A
B
0.1
(9
%)
(33
%)
0.1
5
0
0.6
12
23
0.1
20
27
0.1
38
45
Calculate the expected rate of return, , for Stock B ( =
12.60%.) Do not round intermediate calculations. Round your answer
to two decimal places.
%
Calculate the standard deviation of expected returns,
σA, for Stock A (σB = 19.71%.) Do not round
intermediate calculations. Round your...
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