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In: Finance
Problem 6-13 Historical Realized Rates of Return Stocks A and B have the following historical returns:...
Problem 6-13
Historical Realized Rates of Return
Stocks A and B have the following historical returns:
| Year | ||
| 2012 | -22.60% | -15.90% |
| 2013 | 32.50 | 18.60 |
| 2014 | 17.75 | 28.30 |
| 2015 | -2.50 | -13.50 |
| 2016 | 31.75 | 39.40 |
- Calculate the average rate of return for each stock during the
5-year period. Round your answers to two decimal places.
Stock A % Stock B % - Assume that someone held a portfolio consisting of 50% of Stock
A and 50% of Stock B. What would have been the realized rate of
return on the portfolio in each year? What would have been the
average return on the portfolio during this period? Round your
answers to two decimal places.
Year Portfolio 2012 % 2013 % 2014 % 2015 % 2016 % Average return % - Calculate the standard deviation of returns for each stock and
for the portfolio. Round your answers to two decimal places.
rA rB Portfolio Std. Dev. % % % - If you are a risk-averse investor then, assuming these are your
only choices, would you prefer to hold Stock A, Stock B, or the
portfolio?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Problem 6-13 Historical Realized Rates of Return Stocks A and B have the following historical returns:...
Problem 6-13
Historical Realized Rates of Return
Stocks A and B have the following historical returns:
Year
2012
-23.50%
-14.60%
2013
29.75
21.40
2014
10.50
25.40
2015
-1.75
-7.50
2016
32.50
22.80
Calculate the average rate of return for each stock during the
5-year period. Round your answers to two decimal places.
Stock A
%
Stock B
%
Assume that someone held a portfolio consisting of 50% of Stock
A and 50% of Stock B. What would have been the...
Problem 6-13 Historical Realized Rates of Return Stocks A and B have the following historical returns:...
Problem 6-13
Historical Realized Rates of Return
Stocks A and B have the following historical returns:
Year
2012
-18.30%
-15.70%
2013
34.50
24.80
2014
15.00
26.00
2015
-4.25
-12.10
2016
32.25
36.20
Calculate the average rate of return for each stock during the
5-year period. Round your answers to two decimal places.
Stock A
%
Stock B
%
Assume that someone held a portfolio consisting of 50% of Stock
A and 50% of Stock B. What would have been the...
Historical Realized Rates of Return Stocks A and B have the following historical returns: Year 2012...
Historical Realized Rates of Return
Stocks A and B have the following historical returns:
Year
2012
-19.60%
-14.00%
2013
20.00
30.00
2014
12.00
35.30
2015
-1.00
-10.20
2016
31.50
1.80
Calculate the average rate of return for each stock during the
5-year period. Round your answers to two decimal places.
Stock A
%
Stock B
%
Assume that someone held a portfolio consisting of 50% of Stock
A and 50% of Stock B. What would have been the realized rate...
REALIZED RATES OF RETURN Stocks A and B have the following historical returns: Year Stock A's...
REALIZED RATES OF RETURN
Stocks A and B have the following historical returns:
Year
Stock A's Returns, rA
Stock B's Returns, rB
2011
- 15.90%
- 16.50%
2012
33.50
21.20
2013
11.25
31.60
2014
- 6.00
- 8.80
2015
34.00
29.35
Calculate the average rate of return for stock A during the
period 2011 through 2015. Round your answer to two decimal
places.
%
Calculate the average rate of return for stock B during the period
2011 through 2015. Round...
Historical Realized Rates of Return You are considering an investment in either individual stocks or a...
Historical Realized Rates of Return
You are considering an investment in either individual stocks or
a portfolio of stocks. The two stocks you are researching, Stocks A
and B have the following historical returns:
Year
2011
-15.00%
-15.80%
2012
24.25
24.90
2013
15.75
22.90
2014
-2.00
-7.60
2015
23.75
22.35
Calculate the average rate of return for each stock during the
5-year period. Round your answers to two decimal places.
Stock A
%
Stock B
%
Suppose you had held...
Consider the following realized annual returns: Year End Market Realized Return Stock B Realized Return 2000...
Consider the following realized annual returns:
Year End
Market Realized
Return
Stock B
Realized Return
2000
21.2%
88.3%
2001
30.3%
56.4%
2002
22.3%
114.6%
2003
25.3%
68.4%
2004
-11.0%
-62.8%
2005
-11.3%
52.7%
2006
-20.8%
-22.0%
2007
33.1%
6.9%
2008
13.0%
9.2%
2009
7.3%
-0.9%
Consider the following realized annual returns:
Q1 : Suppose that you want to use the
10 year historical average return on the Market to forecast the
expected future return on the Market. Calculate the 95%...
Historical Returns: Expected and Required Rates of Return You have observed the following returns over time:...
Historical Returns: Expected and Required Rates of Return
You have observed the following returns over time:
Year
Stock X
Stock Y
Market
2011
13%
13%
13%
2012
17
7
12
2013
-13
-5
-13
2014
4
2
2
2015
19
13
12
Assume that the risk-free rate is 4% and the market risk premium
is 6%. Do not round intermediate calculations.
What is the beta of Stock X? Round your answer to two decimal
places.
What is the beta of...
If you have 3 stocks (A), (B), & (C). The following are the rates of returns...
If you have 3 stocks (A), (B), & (C). The following are the
rates of returns in the last 5 years for the three stocks:
Stock A
Stock B
Stock C
30
60
20
20
35
30
40
20
40
25
25
35
35
20
40
Required
Calculate the expected returns for individual stocks A, B &
C.
Calculate the expected risk for individual stocks A, B &
C.
Calculate the covariance and correlation between A&B stocks
and A&C stocks...
If you have 3 stocks (A), (B), & (C). The following are the rates of returns...
If you have 3 stocks (A), (B), & (C). The following are the
rates of returns in the last 5 years for the three stocks:
Stock A
Stock B
Stock C
30
60
20
20
35
30
40
20
40
25
25
35
35
20
40
Required
Calculate the expected returns for individual stocks A, B &
C.
Calculate the expected risk for individual stocks A, B &
C.
Calculate the covariance and correlation between A&B stocks
and A&C stocks...
You've collected the following historical rates of return for stocks A and B: Year (t) rA,t...
You've collected the following historical rates of return for
stocks A and B:
Year (t)
rA,t
rB,t
2016
0.02
0.02
2015
0.08
0.05
2014
0.12
0.07
Part 1: What was the average annual return for stock A=
0.0733
Part 2: What was the average annual return for
stock B?= 0.04667
Part 3: What was the standard deviation of
returns for stock A?
Part 4: What was the standard deviation of returns for stock
B?
Can you solve Part 3 and...
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