Question
In: Finance
: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate...
: You are given the following probability distribution for CHC Enterprises:
| State of Economy | Probability | Rate of return |
| Strong | 0.25 | 18% |
| Normal | 0.5 | 8% |
| Weak | 0.25 | -6% |
What is the stock's expected return? Round your answer to 2
decimal places. Do not round intermediate calculations.
%
What is the stock's standard deviation? Round your answer to two
decimal places. Do not round intermediate calculations.
%
What is the stock's coefficient of variation? Round your answer to two decimal places. Do not round intermediate calculations.
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Solutions
jeff jeffy answered 1 year agoRelated Solutions
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability...
Quantitative Problem: You are given the
following probability distribution for CHC Enterprises:
State of Economy
Probability
Rate of return
Strong
0.15
20
%
Normal
0.55
9
%
Weak
0.30
-5
%
What is the stock's expected return? Do not round intermediate
calculations. Round your answer to two decimal places.
%
What is the stock's standard deviation? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What is the stock's coefficient of variation? Do not round
intermediate...
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability...
Quantitative
Problem: You are given the following probability
distribution for CHC Enterprises:
State of Economy
Probability
Rate of return
Strong
0.15
19%
Normal
0.5
8%
Weak
0.35
-5%
What is the stock's
expected return? Round your answer to 2 decimal places. Do not
round intermediate calculations.
%
What is the stock's
standard deviation? Round your answer to two decimal places. Do not
round intermediate calculations.
%
What is the stock's
coefficient of variation? Round your answer to two decimal places....
You are given the following information: State of Economy Probability of State of Economy Return...
You are given the following information:
State of
Economy
Probability of
State of Economy
Return on
Stock J
Return on
Stock K
Bear
.20
−.030
.024
Normal
.55
.128
.052
Bull
.25
.208
.082
Calculate the expected return for each of the stocks.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places (e.g.,
32.16).)
Expected return
Stock J
%
Stock K
%
Calculate the standard deviation for each of...
Consider the following information: State of Economy Probability of State of Economy Rate of Return if...
Consider the following information:
State of
Economy
Probability of
State of Economy
Rate of Return
if State Occurs
Stock A
Stock B
Recession
.04
.097
.102
Normal
.72
.114
.133
Boom
.24
.156
.148
The market risk premium is 7.4 percent, and the risk-free rate is
3.1 percent. The beta of Stock A is ________ and the beta of Stock
B is ________.
a) 1.25; 1.41
b) 1.47; 1.76
c) 1.21; 1.76
d) 1.25; 1.89
e) 1.47; 1.41
Consider the following information on three stocks: State of Economy Probability of State of Economy Rate...
Consider the following information on three stocks:
State of
Economy
Probability of
State of Economy
Rate of Return
if State Occurs
Stock A
Stock B
Stock C
Boom
.25
.27
.15
.11
Normal
.65
.14
.11
.09
Bust
.10
−.19
−.04
.05
A portfolio is invested 45 percent each in Stock A and Stock B
and 10 percent in Stock C. What is the expected risk premium on the
portfolio if the expected T-bill rate is 4.1 percent?
A.
8.71...
Consider the following subjective probability distribution for a potential investment: State of the economy probability Estimated...
Consider the following subjective probability distribution for
a potential investment:
State of the economy
probability
Estimated rate of return
Strong growth
.1
25%
Moderate growth
.4
15
Weak growth
.4
10
Recession
.1
-12
Calculate the expected rate of return
Calculate the variance
Calculate the standard deviation
Calculate the coefficient of variation
Interpret your answers in a-d
Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A...
Rate of Return if State Occurs State of Economy Probability of
State of Economy Stock A Stock B Recession .25 .03 −.15 Normal .55
.13 .13 Boom .20 .16 .33 a. Calculate the expected return for the
two stocks. (Do not round intermediate calculations. Enter your
answers as a percent rounded to 2 decimal places.) b. Calculate the
standard deviation for the two stocks. (Do not round your
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal...
Rate of return if state occurs State of economy Probability of state of economy Stock A...
Rate of return if state occurs
State of economy
Probability of state of economy
Stock A
Stock B
Stock C
Boom
0.3
0.35
0.45
0.38
Good
0.3
0.15
0.20
0.12
Poor
0.3
0.05
–0.10
–0.05
Bust
0.1
0.00
–0.30
–0.10
5. Consider the
following information on three stocks in four possible future
states of the economy:
Your portfolio is invested 30% in A, 50% in B, and 20% in C.
What is the expected return of your portfolio?
What...
Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A...
Rate of Return if State Occurs
State of Economy
Probability of
State of Economy
Stock A
Stock B
Stock C
Boom
0.70
0.25
0.19
0.09
Bust
0.30
0.09
0.09
0.03
a. What is the expected return on an equally
weighted portfolio of these three stocks?
b. What is the variance of a portfolio invested
30 percent each in A and B and 40 percent in C?
Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A...
Rate of Return If State Occurs
State of
Probability of
Economy
State of Economy
Stock A
Stock B
Stock C
Boom
.15
.39
.49
.29
Good
.55
.15
.20
.08
Poor
.25
−.01
−.09
−.07
Bust
.05
−.20
−.24
−.10
a.
Your portfolio is invested 24 percent each in A and C, and 52
percent in B. What is the expected return of the portfolio?
(Do not round intermediate calculations and enter your
answer as a percent rounded to...
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