The rate of return on the common stock of Flowers by Flo is expected to be...

The rate of return on the common stock of Flowers by Flo is expected to be 14 percent in a boom economy, 8 percent in a normal economy, and only 2 percent in a recessionary economy. The probabilities of these economic states are 10 percent for a boom, 50 percent for a normal economy, and 40 percent for a recession. What is the standard deviation of returns for this investment? Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.)

Expert Solution

Solution :

The standard deviation of returns for this investment = 3.8419 %

= 3.84 % ( When rounded off to two decimal places )

The solution is 3.84

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago

The common stock of Etisalat has an expected return of 11 percent. The return on the...

The common stock of Etisalat has an expected return of 11 percent. The return on the market is 3 percent and the risk-free rate of return is 19 percent. What is the beta of this stock? Answer in 2 decimal places

The expected rate of return for Stock A is? The investment's standard deviation for stock A?...

The expected rate of return for Stock A is? The investment's standard deviation for stock A? COMMON STOCK A COMMON STOCK B PROBABILITY RETURN PROBABILITY RETURN 0.20 11% 0.10 -4% 0.60 16% 0.40 7% 0.20 19% 0.40 14% 0.10 22%

The common stock for Etisalat has an expected return of 9 percent.

The common stock for Etisalat has an expected return of 9 percent. The return on the market is 5 percent and the risk-free rate is 16 percent. What is the beta of this stock?

You have the following information for Stock A and Stock B: Expected rate of return Stock...

You have the following information for Stock A and Stock B: Expected rate of return Stock A: .12 Stock B: .06 Standard deviation: Stock A: .9 Stock B: .5 Correlation between the two stocks: .80 If you invest $600 and $400 in Stock A and Stock B respectively, what is the standard deviation of the portfolio?

(Stocks) A stock with the required rate of return of 13.54% is expected to pay a...

(Stocks) A stock with the required rate of return of 13.54% is expected to pay a $0.81 dividend over the next year. The dividends are expected to grow at a constant rate forever. The intrinsic value of the stock is $22.07 per share. What is the constant growth rate (in %, to the nearest 0.01%)? E.g., if your answer is 4.236%, record it as 4.24.

(Stocks) A stock with the required rate of return of 13.68% is expected to pay a...

(Stocks) A stock with the required rate of return of 13.68% is expected to pay a $1.08 dividend over the next year. The dividends are expected to grow at a constant rate forever. The intrinsic value of the stock is $21.65 per share. What is the constant growth rate (in %, to the nearest 0.01%)? E.g., if your answer is 4.236%, record it as 4.24.

The expected rate of return on a Treasury Bill is 0.020, the expected rate of return...

The expected rate of return on a Treasury Bill is 0.020, the expected rate of return on the Bud 5000 is 0.08 and the required rate of return of a stock is 0.10. What is the stocks beta?

state of the economy probability of occurrence expected return on stock A expected return on stock...

state of the economy probability of occurrence expected return on stock A expected return on stock B High growth 0.1 60% 5% Moderate growth 0.2 20% 20% No growth 0.5 10% 5% Recession 0.2 -25% 0% 1)Calculate the weighted average of the standard deviation of individual stocks A and B ; and show that each portfolio standard deviation is less than this weighted average except the portfolio standard deviation with correlation of 1. 2) Given correlation of -1, what portfolio...

the common stock of great lakes concrete ltd. expected to provide a -10% return if the...

the common stock of great lakes concrete ltd. expected to provide a -10% return if the economy tanks and 18% return if the economy is booming. There is equal probability for the economy sliding into recession or streaming ahead at full employment gdp level. A) what is the expected return on great lakes stock? B) what is the standard deviation?

The current spot price of a stock is $33.00, the expected rate of return is 7.2%,...

The current spot price of a stock is $33.00, the expected rate of return is 7.2%, and the volatility of the stock is 20%. The risk-free rate is 3.8%. (a) Find the 90%-confidence interval for the stock price in 6 months. (b) Compute the expected percent change in the stock over the next 6 months.

Question