Question

In: Accounting

You have done your research for the following investments and your friend has provided their expectations...

You have done your research for the following investments and your friend has provided their expectations for the markets for next year.

State of

Economy

Probability of

State of Economy

Stock

A

Stock

B

Stock

C

Stock

D

T-bills

Stock

Market

Boom

.30

20%

25%

20%

-10%

3%

20%

Normal

.40

15%

12%

16%

15%

3%

15%

Recession

.30

-16%

-15%

-8%

25%

3%

-8%
  1. Calculate the covariance and correlation of the returns for stock A and stock B.
  2. Calculate the covariance and correlation of the returns for stock A and stock C.
  3. Calculate the covariance and correlation of the returns for stock A and stock D.
  4. Calculate the covariance and correlation of the returns for stock B and stock C.
  5. Calculate the covariance and correlation of the returns for stock B and stock D.
  6. Calculate the covariance and correlation of the returns for stock C and stock D.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

You have done your research for the following investments and your friend has provided their expectations...
You have done your research for the following investments and your friend has provided their expectations for the markets for next year. State of Economy Probability of State of Economy Stock A Stock B Stock C Stock D T-bills Stock Market Boom .30 20% 25% 20% -10% 3% 20% Normal .40 15% 12% 16% 15% 3% 15% Recession .30 -16% -15% -8% 25% 3% -8% Calculate the risk for stock A. Calculate the risk for stock B. Calculate the risk...
You want to set aside some money for your friend Pip. (a) You have great expectations...
You want to set aside some money for your friend Pip. (a) You have great expectations for Pip and want to give him $250,000 a year for 20 years. If you’re able to lock in an effective annual nominal interest rate of 8%, how much do you need to put down today if you want the payments to begin next year? (b) Before signing the documents to set up Pip’s trust, you decide that you’re feeling even more generous. How...
Your friend is talking to you about one of their investments. Yesterday, your friend received a...
Your friend is talking to you about one of their investments. Yesterday, your friend received a cheque from the investment for $6,000. According to the company’s annual report and forecast, the company expects the amount of the cash flow to increase or grow at 15 percent for the next 5 years and then to grow at 2 percent forever. 1. If you require a 15% return on your investment, what is the value of this investment today? 2. If interest...
Is there a person that you know, or have done research in that is a Gender...
Is there a person that you know, or have done research in that is a Gender Leader and why?
Suppose that you plan to have the following investments: $1,000 annually on your
Suppose that you plan to have the following investments:$1,000 annually on your 23rd through 30th birthdays -- a total of eight investments. Also, suppose that the interest rate for the year between your 23rd and 24th birthdays is expected to be 4.0% per annum and that this rate will increase by 0.25% each year thereafter until your 31st birthday.a. How much would you have on your 31st birthday?b. What single rate, compounded annually, from your 23rd through 31st birthdays would...
You lend $400,000 to your friend for seven years. According to the agreement, your friend has...
You lend $400,000 to your friend for seven years. According to the agreement, your friend has to repay $89,000 annually for the first four years with a fixed interest rate of 15% compounded annually. Your friend tries to bargain for a 13% charged for the remaining periods. What should be the annual repayment for the last three years?
Your friend texted you a question. You did some research and found that a Minifig is...
Your friend texted you a question. You did some research and found that a Minifig is a package containing one figurine. You also found out that, for every 60 packs produced, 4 of those are Chip and 4 are Dale. A) What is the probability of opening one box and getting Chip? B) What is the probability of opening one box and getting Chip OR Dale? C) What is the probability of opening two boxes and specifically getting Chip in...
(c) You have commenced work as a Certified Financial Planner. Your supervisor has provided the following...
(c) You have commenced work as a Certified Financial Planner. Your supervisor has provided the following financial data for a new client Brant Jerome. The client turned 34 years old today and plans to retire when she turns 67. The client owns a diversified share portfolio which is valued today at $47,000. It is expected that this portfolio will earn (on average) 7% per annum indefinitely. Brant also has a superannuation account with a balance of $78,000 to which he...
(c) You have commenced work as a certified Financial Planner. Your supervisor has provided the following...
(c) You have commenced work as a certified Financial Planner. Your supervisor has provided the following financial data for a new client Brant Jerome. The client turned 34 years old today and plans to retire when she turns 67. The client owns a diversified share portfolio which is valued today at $47,000. It is expected that this portfolio will earn (on average) 7% per annum indefinitely. Brant also has a superannuation account with a balance of $78,000 to which he...
I have purposefully not provided a large selection of readings on this subject.   Research, on your...
I have purposefully not provided a large selection of readings on this subject.   Research, on your own, the 2017/2018 federal tax reform package.    Make sure that you are using materials that are from December 2017 or later. The proposals to amend the law have been in flux before then, and an intelligent discussion requires the best, newest, information. Discuss, using external resources to back up your assertions, how the new tax law changes the tax/regulatory/compliance burden on the entrepreneur.   Are...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT