Questions
2. 2: Risk and Rates of Return: Stand-Alone Risk Stand-alone risk is the risk an investor...

2. 2: Risk and Rates of Return: Stand-Alone Risk


Stand-alone risk is the risk an investor would face if he or she held only _______ . No investment should be undertaken unless its expected rate of return is high enough to compensate for its perceived _______ . The expected rate of return is the return expected to be realized from an investment; it is calculated as the ________ of the probability distribution of possible results as shown below:


The _______ an asset's probability distribution, the lower its risk. Two useful measures of stand-alone risk are standard deviation and coefficient of variation. Standard deviation is a statistical measure of the variability of a set of observations as shown below:

If you have a sample of actual historical data, then the standard deviation calculation would be changed as follows:

The coefficient of variation is a better measure of stand-alone risk than standard deviation because it is a standardized measure of risk per unit; it is calculated as the ________ divided by the expected return. The coefficient of variation shows the risk per unit of return, so it provides a more meaningful risk measure when the expected returns on two alternatives are not _________ .
Quantitative Problem: You are given the following probability distribution for CHC Enterprises:

State of Economy Probability Rate of return
Strong 0.2 22%
Normal 0.5 9%
Weak 0.3 -4%


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 calculations. Round your answer to two decimal places.


blank 1: one porfolio, one asset, multiple assets
blank 2: risk, cost, return
blank 3: combined sum, standard deviation, weighted average
blank 4: wider, tighter, broader
blank 5: correlation coefficient, risk premium, standard deviation
blank 6: identical, different, correlated

In: Finance

A 4-year financial project is forecast to have net cash inflows of $20,000; $25,000; $30,000; and...

A 4-year financial project is forecast to have net cash inflows of $20,000; $25,000; $30,000; and $50,000 in the next 4 years. It will cost $75,000 to implement the project, payable at the beginning of the project. If the required rate of return is 0.2, con duct a discounted cash flow calculation to determine the NPV.

In: Finance

Using the definition of Ka and the Debeye-Huckel expression for the mean ionic activity coefficient, calculate...

Using the definition of Ka and the Debeye-Huckel expression for the mean ionic activity
coefficient, calculate the pH of a 0.10 M acetic acid solution in (a) pure water (b) 0.1 M
NaCl and (c) in 0.2 M MgSO4. Assume consistent results after 3 iterations in each case

In: Chemistry

The linear regression equation for predicting poverty (%) from the high school graduation rate (%) is...

The linear regression equation for predicting poverty (%) from the high school graduation rate (%) is as follows: ˆ y = 29 -0.2*x High school graduation rate for North Carolina is 22% and the poverty rate is 29.5%. Find the residual for this observation (round your answer to one decimal place)

In: Statistics and Probability

Assume that the monetary base (B) is $600 billion, money supply is $3300 billion, the reserve...

Assume that the monetary base (B) is $600 billion, money supply is $3300 billion, the reserve deposit ratio (rr) is 0.1.

1) What is the currency deposit ratio (cr)? (5 points)

2) If cr changes to 0.2, but rr and B are unchanged, what is the money supply? (5 points)

In: Economics

Suppose a 1 kg mass is attached to the end of a string that is stretched...

Suppose a 1 kg mass is attached to the end of a string that is stretched 0.2 m by a force of 500 N (newtons). An exterior force F0 cos 50t acts on the mass. Find the position function x(t) if the initial conditions are given by x(0) = 0, x′(0) = 50.

In: Advanced Math

A turbine blade of solution annealed INCOLOY alloy 800 is 18 in long and operates at...

A turbine blade of solution annealed INCOLOY alloy 800 is 18 in long and operates at 1400 degrees Fahrenheit. If the tip clearance is 0.2 in and centrifugal forces induce an average longitudinal stress of 10 ksi. After how many hours is expected the blade to interfere with the turbine stator due to creep?

In: Mechanical Engineering

The posterior probabilities of four hypothesis h1,h2,h3,h4 are (0.2, 0.5,0.2, 0.1) respectively. A new training sample...

The posterior probabilities of four hypothesis h1,h2,h3,h4 are (0.2, 0.5,0.2, 0.1) respectively. A new training sample is classified +ve by h2 and h3, while h1 and h4 classify the same data instance as -ve. Find the classification with Bayes Optimal Classifier and Brute Force Classification?

In: Statistics and Probability

Mass 1 is moving at 6 m/s in the +x direction and it collides in a...

Mass 1 is moving at 6 m/s in the +x direction and it collides in a perfectly elastically with mass 2 of 2 kg moving at 15 in the -x direction. They collide for 0.2 seconds, and the average force on mass 1 is 149 N in the -x direction. What is the mass of mass 1 in kg?

In: Physics

Use the normal distribution to find a confidence interval for a proportion p given the relevant...

Use the normal distribution to find a confidence interval for a proportion p given the relevant sample results. Give the best point estimate for p, the margin of error, and the confidence interval. Assume the results come from a random sample.

A 99% confidence interval for p given that p^=0.7 (this is p hat) and n=110.

Round your answer for the point estimate to two decimal places, and your answers for the margin of error and the confidence interval to three decimal places.

In: Statistics and Probability