Question
In: Finance
Given the returns and probabilities for the three possible states listed below, calculate the covariance between...
Given the returns and probabilities for the three possible states listed below, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 10.00 percent and 16.00 percent, respectively. (Round answer to 4 decimal places, e.g. 0.0768.) Probability Return on Stock A Return on Stock B Good 0.35 0.30 0.50 OK 0.45 0.10 0.10 Poor 0.20 -0.25 -0.30 Covariance
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Given the returns and probabilities for the three possible states listed below, calculate the covariance between...
Given the returns and probabilities for the three possible
states listed below, calculate the covariance between the returns
of Stock A and Stock B. For convenience, assume that the expected
returns of Stock A and Stock B are 11.75 percent and 18 percent,
respectively. Probability Return on Stock A Return on Stock B Good
0.35 0.30 0.50 OK 0.50 0.10 0.10 Poor 0.15 −0.25 −0.30
Given the returns and probabilities for the three possible states listed here, calculate the covariance between...
Given the returns and probabilities for the three possible
states listed here, calculate the covariance between the returns of
Stock A and Stock B. For convenience, assume that the expected
returns of Stock A and Stock B are 0.11 and 0.15, respectively.
(Round your answer to 4 decimal places. For example .1244)
Probability
Return(A)
Return(B)
Good
0.35
0.30
0.50
OK
0.50
0.10
0.10
Poor
0.15
-0.25
-0.30
Given the returns and probabilities for the three possible states listed here, calculate the covariance between...
Given the returns and probabilities for the three possible
states listed here, calculate the covariance between the returns of
Stock A and Stock B. For convenience, assume that the expected
returns of Stock A and Stock B are 0.09 and 0.16, respectively.
(Round your answer to 4 decimal places. For example .1244)
Probability
Return(A)
Return(B)
Good
0.35
0.30
0.50
OK
0.50
0.10
0.10
Poor
0.15
-0.25
-0.30
Given the returns and probabilities for the three possiblestates listed here, calculate the covariance between...
Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.12 and 0.15, respectively. (Round your answer to 4 decimal places. For example .1244) Probability Return(A) Return(B) Good 0.35 0.30 0.50 OK 0.50 0.10 0.10 Poor 0.15 -0.25 -0.30
Consider three scenarios with the probabilities given below. Let the returns on two different stocks in...
Consider three scenarios with the probabilities given below. Let
the returns on two different stocks in these scenarios be as
follows: Scenario Probability return K1 return K2 ω1 0.2 −10% −30%
ω2 0.5 0% 20% ω3 0.3 10% 50% If a portfolio has 60% of funds
invested in stock 1 and 40% of funds invested in stock 2, find the
risk σV for this portfolio. (Need explanation not just
spreadsheet)
Possible outcomes for three investment alternatives and their probabilities of occurrence are given below. Alternative 1...
Possible outcomes for three investment alternatives and their
probabilities of occurrence are given below. Alternative 1
Alternative 2 Alternative 3 Outcomes Probability Outcomes
Probability Outcomes Probability Failure $ 30 0.20 $ 80 0.40 $ 90
0.40 Acceptable 60 0.20 140 0.20 225 0.40 Successful 120 0.60 210
0.40 380 0.20 Rank the three alternatives in terms of least risk to
most risk. (Do not round intermediate calculations. Round the final
answers to 3 decimal places.) Rank Coefficient of Variation
Possible outcomes for three investment alternatives and their probabilities of occurrence are given next. Alternative...
Possible outcomes for three investment alternatives and their
probabilities of occurrence are given
next.
Alternative 1
Alternative 2
Alternative 3
Outcomes
Probability
Outcomes
Probability
Outcomes
Probability
Failure
60
.20
70
.20
80
.20
Acceptable
60
.40
220
.40
250
.60
Successful
130
.40
240
.40
415
.20
Using the coefficient of variation, rank the three alternatives in
terms of risk from lowest to highest. (Do not round
intermediate calculations. Round your answers to 3 decimal
places.)
Three tables listed below show random variables and their probabilities. However, only one of these is...
Three tables listed below show random variables and their
probabilities. However, only one of these is actually a probability
distribution.
A
B
C
x
P(x)
x
P(x)
x
P(x)
25
0.1
25
0.1
25
0.1
50
0.6
50
0.6
50
0.6
75
0.1
75
0.1
75
0.1
100
0.2
100
0.4
100
0.6
a. Which of the above tables is a probability
distribution?
(Click to select) A B C
b. Using the correct probability distribution,
find the probability that x is: (Round the...
Three tables listed below show random variables and their probabilities. However, only one of these is...
Three tables listed below show random variables and their
probabilities. However, only one of these is actually a probability
distribution.
Table 1: X P(X)
Table 2: X
P(X)
Table
3: X P(X)
25
0.1 25
-0.6
25 0.5
50 0.7
50
0.2
50 0.3
75
0.2
15
0.1
75 0.1
100
0.4
100
0.1 100
0.1
a. Which of the above tables is a probability distribution?
b.Using the correct probability distribution, find the
probability that x is...
Explain Key Statistical Relationships between Covariance and Correlation of Returns
Explain Key Statistical Relationships between Covariance and
Correlation of Returns
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