Question

In: Finance

Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR...

Suppose your expectations regarding the stock market are as follows:


State of the Economy Probability HPR
Boom 20% 15%
Normal growth 50% 7%
Recession 30% -10%

Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)


Mean %
Standard deviation %

Solutions

Expert Solution

Solution: -


Working

jeff jeffy answered 3 years ago
Next > < Previous

Related Solutions

Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR...
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.4 32% Normal growth 0.3 20 Recession 0.3 -16 Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Please show all working.
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR...
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.2 43% Normal growth 0.4 14 Recession 0.4 -17 Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Suppose your expectations regarding the stock price are as follows: State of the Market Probability Ending...
Suppose your expectations regarding the stock price are as follows: State of the Market Probability Ending Price HPR (including dividends) Boom 0.23 $ 140 44.5 % Normal growth 0.29 110 11.5 Recession 0.48 80 −21.5 Use the equations E(r)=Σsp(s)r(s)E(r)=Σsp(s)r(s) and σ2=Σsp(s)[r(s)−E(r)]2σ2=Σsp(s) [r(s)−E(r)]2 to compute the mean and standard deviation of the HPR on stocks. Do not round intermediate calculations. Round your answers to 2 decimal places.) a .Mean% [___] b. Standard deviation% [____]
Suppose your expectations regarding the stock market are in the chart below. What is the standard...
Suppose your expectations regarding the stock market are in the chart below. What is the standard deviation of the HPRs on stocks? convert to percentages and round your answer to two decimal places State of the Economy Probability HPR Boom 10% 35% Normal Growth 40% 8% Recession 50% -20
State of the Economy Probability HPR (Fund A) HPR (Fund B) Boom .50 7% 25% Normal...
State of the Economy Probability HPR (Fund A) HPR (Fund B) Boom .50 7% 25% Normal growth .3 -5% 10% Recession .2 20% -25% 1.   What are the expected holding period returns for Fund A and Fund B? 2. What are the expected standard deviations for Fund A and Fund B? 3. What are the covariance and correlation coefficient between the returns of Fund A and Fund B? 4. Now using Fund A and Fund B to construct our optimal...
Suppose your expectations regarding the stock price are asfollows:State of the MarketProbabilityEnding...
Suppose your expectations regarding the stock price are as follows: State of the Market Probability Ending Price HPR (including dividends) Boom 0.28 $ 140 53.5 % Normal growth 0.23 110 20.0 Recession 0.49 80 −17.0 Use the equations E(r)=Σsp(s)r(s)E(r)=Σsp(s)r(s) and σ2=Σsp(s)[r(s)−E(r)]2σ2=Σsp(s) [r(s)−E(r)]2 to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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...
State of Economy Probability of State of Economy Return of Stock A if State Occurs Return...
State of Economy Probability of State of Economy Return of Stock A if State Occurs Return of Stock B if State Occurs Recession 0.30 -0.20 0.10 Normal ? 0.30 0.20 Boom 0.15 0.40 0.30 What is the expected return for Stock A? What is the standard deviation for Stock A? Suppose you have $50,000 total. If you put $20,000 in Stock A and the remainder in Stock B, what are the portfolio returns in each state? Suppose you have $50,000...
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?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT