Question
In: Statistics and Probability
You are trying to develop a strategy for investing in two different stocks. The anticipated annual...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the following probability distribution:
Probability : 0.1 , 0.3, 0.3 , 0.3 .
Economic Condition: Recession, slow growth, moderate growth, fast growth.
-
Return} -Stock X: -100 , 0 , 80 , 150 .
-
- Stock Y: 50 , 150 , -20 , -100 .
a) Covariance of stock X and Y
Solutions
Covariance of stock X and Y is -
8066 .66
orchestra answered 2 years agoRelated Solutions
You are trying to develop a strategy for investing in two different stocks. The anticipated annual...
You are trying to develop a strategy for investing in two
different stocks. The anticipated annual return for a $1,000
investment in each stock under four different economic conditions
has the probability distribution shown to the right. Complete
parts (a) through (c) below.
Probability Economic condition Stock_X Stock_Y
0.1 Recession -150 -170
0.2 Slow_growth 20 50
0.4 Moderate_growth 100 130
0.3 Fast_growth 160 210
a. Compute the expected return for stock X and for stock Y. The
expected return...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual...
You are trying to develop a strategy for investing in
two different stocks. The anticipated annual return for a $1,000
investment in each stock under four different economic conditions
has the probability distribution shown to the right. Complete
parts (a) through (c) below.
RETURNS
PROBABILITY ECONOMIC CONDITION STOCK X STOCK
Y
0.1 Recession -50 -170
0.3 Slow Growth 30 40
0.4 Moderate Growth 90 150
0.2 Fast Growth 160 200
(1) Compute the expected return for stock X
and for...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual...
You are trying to develop a strategy for investing in two
different stocks. The anticipated annual return for a $1,000
investment in each stock under four different economic conditions
has the following probability distribution.
Returns
Probability
Economic Condition
Stock X
Stock Y
0.1
Recession
-50
-100
0.2
Slow Growth
20
50
0.45
Moderate Growth
100
130
0.25
Fast Growth
150
200
Expected Return for Stock X and Stock Y.
Standard Deviation for Stock X and Stock Y
Would you invest...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual...
You are trying to develop a strategy for investing in two
different stocks. The anticipated annual return for a $1,000
investment in each stock under four different economic conditions
has the probability distribution shown to the right. Complete
parts (a) through (c) below.
Probability Economic_condition
Stock_X Stock_Y
0.1 Recession -90 -170
0.3 Slow_growth 20 50
0.4 Moderate_growth 110 150
0.2 Fast_growth 160 190
A. Compute the expected return for stock X and for stock Y.
The expected return for...
4. you are trying to develop a strategy for investing in two different stocks. The anticipated...
4. you are trying to develop a strategy for investing in two
different stocks. The anticipated annual return for a $1,000
investment in each stock under four different economic conditions
has the following probability distribution:
Probability
Economic Condition
Return Stock X
Return Stock Y
0.1
Recession
−100
50
0.3
Slow growth
0
150
0.3
Moderate growth
80
-20
0.3
Fast growth
150
-100
a. Expected return for stock X and for stock Y.
b. Standard deviation for stock X and...
You are interested in investing in two different shares. The anticipated annual return for a $1,000...
You are interested in
investing in two different shares. The anticipated annual return
for a $1,000 investment in each share under different economic
conditions is given below, together with the probability that each
of these economic conditions will occur.
State
of
Returns
Probability
the
economy
Share
X
Share
Y
0.25
Recession
$240
-$100
0.5
Slow growth
$150
$150
0.25
High growth
-$100
$240
Calculate the expected return for share X and for share Y.
Calculate the standard deviation for share...
Question : “By investing in diversified portfolio of stocks in different industries or sectors, you can...
Question : “By investing in diversified portfolio of stocks in
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Do you agree with statement? Explain using your own words. How
do we measure the risk associated with a particular stock? Explain
using your own words.
“By investing in diversified portfolio of stocks in different industries or sectors, you can remove all...
“By investing in diversified portfolio of stocks in different
industries or sectors, you can remove all the risks associated with
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words.
How do we measure the risk associated with a particular stock?
Explain using your own words.
You are considering investing in two common stocks holding them in a two-stock portfolio. Stock A...
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between the two stocks is 0.57, what is the portfolio's expected
return and standard deviation?
A.
13.96% and 19.93%...
Two stocks each currently pay a dividend of $2.20 per share. It is anticipated that both...
Two stocks each currently pay a dividend of $2.20 per share. It
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Firm A has a beta coefficient of 0.98 while the beta coefficient
of firm B is 1.08. If U.S. Treasury bills currently yield 2.1
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8.5 percent, what are the valuations of these two stocks using the
dividend-growth model? Do not...
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