Calculating returns and standard deviations

Assignment Help Financial Management
Reference no: EM131188315

Calculating Returns and Standard Deviations [LO1] Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Recession .21 .09 − .16 Normal .51 .12 .13 Boom .28 .17 .30 Calculate the expected return for each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return Stock A % Stock B % Calculate the standard deviation for each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation Stock A % Stock B %

Reference no: EM131188315

Questions Cloud

Estimate present value of the tax benefits from depreciation : Your company is considering a new project that will require $885,000 of new equipment at the start of the project. The equipment will have a depreciable life of 9 years and will be depreciated to a book value of $147,000 using straight-line depreciat..
What is the approximate real rate of interest : Treasury bills are currently paying 6 percent and the inflation rate is 3.4 percent. What is the approximate real rate of interest? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate real rate % What is the exact r..
Explain what capital adequacy means : Explain what “capital adequacy” means. Then explain how it has been used to try and address risk management of banks. Finally, as an opinion, relate if you think this has been helpful through the Basel Accords.
Apply an interesting concept to real-life situation : What are the primary purposes of the Bankruptcy Code?  Describe the creditor actions that are automatically held in abeyance when the debtor files a bankruptcy petition. When is a debtor allowed to void liens on his properties? What type of liens can..
Calculating returns and standard deviations : Calculating Returns and Standard Deviations [LO1] Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Recession .21 .09 − .16 Normal .51 .12 .13 Boom .28 .17 .30 Calculat..
What about the worst-case scenario : Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $2,100 per unit; variable costs = $420 per unit; fixed costs = $5.0 million; quantity = 88,000 units. Suppose the company believes all of its estimates ..
Asset allocation strategy-current economic environment : In late 2004, K.C. Sung is planning an asset allocation strategy but would first like to assess Australia’s current economic environment, then make a forecast for the economic conditions expected over the succeeding six- to nine-month period. Using t..
Essay topics for drama 2140 : Essay Topics for Drama 2140, It could be argued that our first four playwrights this term are interested in the consequences of both allowing and resisting passions. Various characters are portrayed inciting, denying, allowing, preventing or succumbi..
Company should erect its own towers or lease them out : B-Tel, Inc. is a telecommunication services provider looking to expand to a new territory Z; it is analyzing whether it should install its own telecom towers or lease them out from a prominent tower-sharing company T-share, Inc. Determine whether the..

Reviews

Write a Review

Financial Management Questions & Answers

  What is your best estimate of the aftertax cost of debt

Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual bond 3 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 40 percent. Suppose the book value of the debt issue is $50 million. In addition, the ..

  What is the effective annual rate on this loan

You have just purchased a new warehouse. To finance the purchase, you arranged for a 30-year mortgage loan for 65 percent of the $2.5 million purchase price. The monthly payment on this loan will be $10,400. What is the effective annual rate on this ..

  What do investors require as a rate of return on this stock

Lake industries preferred stock has a par value of $100 and pays a dividend of $6.00 per share. it presently sells for $87 per share. What do investors require as a rate of return on this stock?

  Project will use the straight-line depreciation method

Wheel Industries is considering a three-year expansion project, Project A. The project requires an initial investment of $1.5 million. The project will use the straight-line depreciation method. The project has no salvage value.

  Decrease net cash provided by operating activities

Cash inflows from investing activities include. Operating activities do not include cash. Which of the following would decrease net cash provided by operating activities?

  Further assume that the returns are normally distributed

Suppose the average return on an asset is 12.3 percent and the standard deviation is 21.9 percent. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to determine the probability that in any given year you wi..

  Present value of an annuity

Present Value of an Annuity What is the present value of a $2,100 annuity payment over 7 years if interest rates are 11 percent?

  Calculate the total amount of principal repaid during year

Eric takes out a 30-year loan on Jan 1, 1992 for $20,000 at an annual effective interest rate of 5%. Payments are made at the end of each year. On Jan 1, 2002, Eric takes out a 20 year loan for $10,000 at an annual effective interest rate of 7%. Paym..

  What are the operating cash flows in each year

Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $31,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $7,750. What are the operating cas..

  Operating divisions-auto division and truck division

Sharp Motor Company has two operating divisions—an Auto Division and a Truck Division. The company has a cafeteria that serves the employees of both divisions. The costs of operating the cafeteria are budgeted at $78,000 per month plus $0.80 per meal..

  The firms net income exceed its free cash flow

Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $1,000 of depreciation. The company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and i..

  What is your portfolio return

Year-to-date, Oracle had earned a −1.53 percent return. During the same time period, Valero Energy earned 8.07 percent and McDonald's earned 0.70 percent. If you have a portfolio made up of 25 percent Oracle, 30 percent Valero Energy, and 45 percent ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd