Answer full question.thank you The following are estimates for two stocks.StockABExpectedReturnStock AStock B13%18Beta0.81.2Firm-SpecificStandardDeviationThe market index has a standard deviation of 22% and the risk-free rate is 8%.a. What are the standard deviations of stocks A and B? (Do not round intermediate calculations. Round your answers to 2 decimalplaces.)30%40%%

A standard deviation (symbol σ) is a proportion of how distributed the information/data is…

The following are estimates for two stocks. Firm-Specific Standard Deviation Stock A B Expected Return 13% 18 Beta 0.8 1.2 30% 40 The market index has a standard deviation of 22% and the risk-free rate is 8%. a. What are the standard deviations of stocks A and B? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

The following are estimates for two stocks. Firm-Specific Standard Deviation Stock A B Expected Return 13% 18 Beta 0.8 1.2 30% 40 The market index has a standard deviation of 22% and the risk-free rate is 8%. a. What are the standard deviations of stocks A and B? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 6E

See similar textbooks

Similar questions

You've estimated the following expected returns for a stock, depending on the strength of the economy: State (s) Probability Expected return Recession 0.3 -0.03 Normal 0.5 0.08 Expansion 0.2 0.13 What is the expected return for the stock? What is the standard deviation of returns for the stock?
EXTRA RISK PROBLEMS Sanck A Sk Expected Retun Standand Deviatim 12 75 16 Comelation cnefficieit wth the Market Comelation coeficient with Stock B Risk fre e 2% Expected etu on the Market 12 Standund deviation of the Market E 1. What is the expected retum on a portfolio comprised of S60o00 of Suck A and S4000 of Sock B7 2. Whe is the Stnderd deviation of this portidio? 3. Does it make sense to combine these two in this way? Pease explain why. 4 What is the ocoefficient of variation for Stock A? What is the coefficient of variation for Stock B?
A share of stock of A-Star Inc. is now selling for $23.50. A financial analyst summarizes the uncertainty about the rate of return on the stock by specifying three possible scenarios: Business Condition Scenario, s Probability, p(s) End of Year Price Annual Dividend High growth 1 0.35 $35 $ 4.40 Normal growth 2 0.30 27 4.00 No growth 3 0.35 15 4.00 What are the holding-period returns for a one-year investment in the stock of A-Star Inc. for each of the three scenarios? Calculate the expected HPR and standard deviation of the HPR.
(Measuring risk and rate return) Given the following holding-period returns, calculate the standard deviation for the market. answer is 6.02 Month Champ Inc. Market 1 2.8% 1.8% 2 3.2% 1.2% 3 9.0% 11.0% 4 -2.6% -1.0% 5 -2.9% -4.7% 6 12.0% 8.0%
An investment plan allows investors to deposit a minimum of £1,000 at the beginning of the term, which pays a fixed return rate of 5% per annum. Af- ter a year, investors have to deposit a minimum of £800 with an expected return rate of 3% per annum for the second year and a standard deviation of 2% per annum. a. Find the expected value of the total minimum amount earned after two years of investment. b. Find the standard deviation of the total minimum amount earned after two years of investment.
1 Consider the two investments listed below with possible outcomes and probabilities: INVESTMENT (in $1000) P SAFE RISKY INVESTMENT AMOUNT 40+ 40+ GOOD SCENARIO OUTCOME 45+ 80+ AVERAGE+ SCENARIO PROB+ OUTCOME 0.40+ 0.40 42+ 45 BAD+ SCENARIO PROB OUTCOME PROB 0.20 35+ 0.20 10 0.40€ 0.40 a) What are the expected payoffs (E(x)) and standard deviations for each investment? b) Suppose I have utility function U(*) = √(x). What is the expected utility from each investment? c) Which investment will I choose, if any? Show and explain your work and provide the intuition.< d) What is the value of the risk premium for the SAFE investment? Show and explain your work and provide the intuition. e) What is the value of the risk premium for the RISKY investment? Show and explain your work and provide the intuition.< 43 A ✔ →
In a financial market a stock is traded with a current price of 50. Next period the price of the stock can either go up with 30 per cent or go down with 25 per cent. Risk-free debt is available with an interest rate of 8 per cent. Also traded are European options on the stock with an exercise price of 45 and a time to maturity of 1, i.e. they mature next period. Find prices of Arrow-Debreu securities.
If a trader sells an option at an implied volatility of 10%, and plans to delta hedge it, over the life of the option she hopes realized volatility will be: A. lower than 10% B. if its three month option then she hopes its 10/3 C. higher than 10% D. irrelevant where realized will be
Suppose that you have a stock with a market beta of zero. This means that: a) the stock has no risk for an investor when held alone. b) the stock adds no risk when held in a market portfolio. c) the stock´s returns must have a standard deviation of zero. d) the expected return on this stock must be zero or negative. e) this stock´s returns must be uncorrelated with the market returns. pls show procedure, thanks
Only typed answer Assume the correlation of returns between KO and the market portfolio equals 0.80, the standard deviation of KO equals 0.60, and the standard deviation for the market portfolio equals 0.30. What is the beta for KO.
17.1You’re the manager of global opportunities for a U.S manufacturer who is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, Philippines and Singapore's described next: Big Mediocre Failure Malaysia Probability 0.3 0.3 0.4 Units 12,000,000 600,000 0 Phillipines Probability 0.3 0.5 0.2 Units 1,000,000 320,000 0 Singapore Probability 0.7 0.2 0.1 Units 700,000 400,000 0 The product sells for $10 and has unit cost of $8. If you can enter only one market, and the cost of entering the market( Regardless of which market you select) is $250,000, should you enter on of these markets? I so, which one? If you enter, what is your expected profit?
Problem 1 Synergy Company sells co-amoxiclav antibiotic. The probability distribution of the demand for co-amoxiclav antibiotic is as follows: Estimated Sales in Units 120 units 210 units 300 units Probability 0.12 0.18 0.22 The estimated demand for co-amoxiclav antibiotics this coming month using the expected value approach is 1. How much is Expected Value? S =