Question

In: Finance

The returns on shares of Laverne Corporation and Shirley Corporation are predicted under the following various...

The returns on shares of Laverne Corporation and Shirley Corporation are predicted under the following various economic conditions:

State of Economy Return on Laverne Return on Shirley

Recession -20% -30%

Stagnant +0% -5%

Moderate Growth +10% +10%

Boom +30% +65%

Each economic state has a 25% probability of occurring.

What are the expected returns of each stock? What are the variances of each stock? What are the standard deviatiions of each stock?

  • Also solve the problem for a portfolio of both stocks, with 25% invested in Laverne and 75% invested in Shirley

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

1. The returns on shares of Laverne Corporation and Shirley Corporation are predicted under the following...
1. The returns on shares of Laverne Corporation and Shirley Corporation are predicted under the following various economic conditions: State of Economy Return on Laverne Return on Shirley Recession -20% -30% Stagnant +0% -5% Moderate Growth +10% +10% Boom +30% +65% Each economic state has a 25% probability of occurring. What are the expected returns of each stock? What are the variances of each stock? What are the standard deviatiions of each stock?
1. The returns on shares of Valley Transporter are predicted under the following various economic conditions:...
1. The returns on shares of Valley Transporter are predicted under the following various economic conditions: Recession -0.13 Normal +0.08 Boom +0.25 If each economy state has the same probability of occurring (33.33%), what is the variance of the stock? Place your answer in decimal form using four decimal places. 2. The return on shares of the Orange Company are predicted under the following states of nature. The states of nature are all equally likely, and because there are a...
1. The return on shares of Valley Transporter is predicted under the following various economic conditions:...
1. The return on shares of Valley Transporter is predicted under the following various economic conditions: Recession  -0.14 Normal +0.07 Boom +0.24 If each economy state has the same probability of occurring, what is the variance of the stock? Place your answer in decimal form using four decimal places. 2. The return on shares of the Orange Company are predicted under the following states of nature. The states of nature are all equally likely, and because there are a total of...
Clarence Corporation has one hundred (100) shares of stock outstanding which are owned by Shirley and...
Clarence Corporation has one hundred (100) shares of stock outstanding which are owned by Shirley and Deidra who are unrelated. Shirley owns forty (40) shares of the stock and Deidra owns sixty (60) shares of the stock. Clarence Corporation redeems twelve (12) of Shirley’s shares of stock for $800 per share. Shirley paid $200 per share for her stock three (3) years ago. Assuming Clarence Corporation has significant Earning And Profit (E&P), which of the following is correct regarding the...
The following table presents forecasted returns for three companies under various potential states of the economy:...
The following table presents forecasted returns for three companies under various potential states of the economy: State Probability Stock X Stock Y Stock Z Above Average 10% 38.4% 28.0% 43.8% Average 45% 15.1% 9.0% 12.0% Below Average 30% -2.0% -4.0% -7.0% Recession 15% -12.1% -6.0% -15.7% Weight 55% 30% 15% What is the expected return on a portfolio of these three companies constructed according to the weights given in the table? (Report answer in percentage terms and round to 2...
The following table presents forecasted returns for three companies under various potential states of the economy:...
The following table presents forecasted returns for three companies under various potential states of the economy: State Probability Stock X Stock Y Stock Z Above Average 10% 38.3% 27.1% 43.2% Average 45% 16.7% 5.5% 12.0% Below Average 30% -2.5% -4.0% -7.0% Recession 15% -10.9% -6.0% -15.6% Weight 55% 30% 15% What is the standard deviation on a portfolio of these three companies constructed according to the weights given in the table? (Report answer in percentage terms and round to 2...
Osage Corporation issued 2,000 shares of stock. Prepare the entry for the issuance under the following...
Osage Corporation issued 2,000 shares of stock. Prepare the entry for the issuance under the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) The stock had a par value of $5 per share and was issued for a total of $52,000. (b) The stock had a stated value of $5 per share and...
Edwards Corporation operates hair salons under various brand names. The following is a simplified list of...
Edwards Corporation operates hair salons under various brand names. The following is a simplified list of accounts and amounts (in millions) reported in the company’s accounts for the year ended June 30, 2013.              Accounts Payable $ 68   Accounts Receivable 57   Accumulated Amortization 38   Accumulated Depreciation—Equipment 77   Amortization Expense 19   Cash 198   Common Stock 380   Depreciation Expense 73   Equipment 680   Income Tax Expense 19   Interest Expense 38   Inventories 148   Note Payable (long-term) 154   Note Payable (short-term) 118   Office Expenses...
The controller for Canandaigua Vineyards. Inc. has predicted the following costs at various levels of wine...
The controller for Canandaigua Vineyards. Inc. has predicted the following costs at various levels of wine output. Wine Output (.75 Liter Bottles) 10,000 Bottles 15,000 Bottles 20,000 Bottles Variable production costs .. $37.000 $55.500 $74.000 Fixed procluction costs .. $100.000 $100,000 $100.000 Fixed selling and administrative costs ... $40.000 $40.000 $40,000 Total .. $177,000 $195,500 $214,000 The company's marketing manager has predicted the following prices for the firm's fine wines at various levels of sales. Wine Sales Sales price per.75...
Suppose you have predicted the following returns for stocks ABC and XYZ in three possible states...
Suppose you have predicted the following returns for stocks ABC and XYZ in three possible states of the economy:             State                Probability       XYZ                ABC             Boom              0.50                 -5%                  25%             Normal            0.30                 10%                 10%             Recession        0.20                 12%                 -5% 1. Calculate the expected return on ABC. 2. Calculate the expected return on XYZ. 3. Suppose you construct a portfolio with ABC and XYZ exclusively. You allocate 40% of your investment to ABC, and 60% to XYZ....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT