Calculate the covariance between the returns of stock

Assignment Help Financial Management
Reference no: EM131044367

Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.13 and 0.19, respectively. (Round your answer to 4 decimal places. For example .1244

Reference no: EM131044367

Questions Cloud

How is a net present value profile used to compare projects : How is a net present value profile used to compare projects? What causes conflict in the ranking of projects via net present value and internal rate of return? Does the assumption concerning the reinvestment of intermediate cash inflows tend to favor..
Important setup reduction on restaurants : As a customer why is important setup reduction on restaurants from customer A go out table until Customer B take the sit?
What herbal cures and products covered in your textbook : What conclusions do you personally come to about "natural" herbal treatments vs. standard AMA pharmacology? What herbal cures and products covered in your textbook would you personally use for everyday illnesses?
What effect increasing sample size have upon sampling error : What effect does increasing the sample size have upon the sampling error? Which of the following is not a type of non-probability sampling?
Calculate the covariance between the returns of stock : Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.13 and 0.19, respective..
Non-native speakers in worldwide language teaching : What are the advantages of non-native speakers in worldwide language teaching?
What is the most you can borrow if interest rates : You have reviewed your budget and determine that the most you can afford on a car loan is $550 per month. What is the most you can borrow if interest rates are 6 percent and you can pay the loan over three years?
Now adjust for unequal lives with equivalent annual cost : Singing Fish Fine Foods has $2,000,000 for capital investments this year and is considering two potential projects for the funds. Project one is updating the deli section of the store for additional food service. The estimated annual after-tax cash f..
Fired flight attendants fight back against united airline : Imagine you represent a person who claims to have been the victim of a breach of contract. Determine the information that you would need to know to best determine if there was a contract.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the depreciation tax shield for this project

Your firm needs a machine which costs $230,000, and requires $44,000 in maintenance for each year of its 10 year life. After 5 years, this machine will be replaced. The machine falls into the MACRS 10-year class life category. Assume a tax rate of 40..

  Zero coupon bond with a face value

A zero coupon bond with a face value of $1,000 is issued with an initial price of $463.34. The bond matures in 25 years. What is the implicit interest, in dollars, for the first year of the bond's life?

  What is the future value if payments are ordinary annuity

What is the present value of the payments if they are in the form of ordinary annuity? What is the present value if the payments are annuity due? Suppose you plan to invest the payments for five years. What is the future value if the payments are an ..

  Estimate of the expected rate of return on the stock

Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 3%, and IR 4.4%. A stock with a beta of 2.3 on IP and 1.6 on IR currently is expected t..

  Wal-mart cost of capitalwal-mart with 50 billion in sales

wal-mart cost of capitalwal-mart with 50 billion in sales in 2010 is the worlds largest retailer. it operates nearly

  What is the estimated value of tall tree timber

Tall Tree Timber has net income of $167,000 for the year with 60,000 shares of stock outstanding. Big Trees is a similar firm with similar growth opportunities and it has 75,000 shares of stock outstanding with a market price of $32.20 a share and ea..

  Difference in costs between the two health-care plans

Latesha Moore has a choice at work between a traditional health insurance plan that pays 80 percent of the cost of doctor visits after a s250 deductible and an HMO that charges a $10 co-payment per visit plus a $20 monthly premium deduction from her ..

  Would you argue that the cost of equity should be zero

Would you argue that the cost of equity should be zero? After all, we can determine our own dividend policy. The amount of earnings we choose to keep in the business (i.e., retained earnings after paying dividends) is "free", right?

  Theoretical method using the new yield to maturity

A 1000 seven-year 6% bond with semi-annual coupons is redeemable for 1065. It was originally purchased at issue for 970. It is sold after 45 months for 995. Find the accrued interest by the theoretical method using the new yield to maturity.

  Eliminate any further possibilities of locational arbitrage

What market forces would occur to eliminate any further possibilities of locational arbitrage?

  No dividends will be paid on the stock over next few year

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next few years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a $3 per share dividend in year 6 and wi..

  What is the risk free rate of return

The expected return on JK stock is 13.40 percent while the expected return on the market is 10.8 percent. The beta of JK stock is 1.4. What is the risk-free rate of return?

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