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Calculate the expected return for the two stocks

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Reference no: EM13848030

1. Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. Assuming that all three states are equally likely. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

2. Calculate the expected returns for Roll and Ross by filling in the following table (verify your answer by expressing returns as percentages as well as decimals): (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your E(R) answers to 2 decimal places and your Product answers to 4 decimal places. Omit the "%" sign in your response.)
Calculate the expected return on a portfolio of 40 percent Roll and 60 percent Ross by filling in the following table: (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)


3. Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

4. Calculate the standard deviation for the two stocks. (Do not round your intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

5. Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

 - What is the variance of this portfolio? (Do not round intermediate calculations. Round your answer to 5 decimal places.)

- What is the standard deviation? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

6. Fill in the missing information in the following table. Assume that Portfolio AB is 70 percent invested in Stock A. (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

7. Given the following information, calculate the expected return and standard deviation for a portfolio that has 25 percent invested in Stock A, 32 percent in Stock B, and the balance in Stock C. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

8. A stock has an expected return of 13.8 percent, the risk-free rate is 3.4 percent, and the market risk premium is 9.1 percent. What must the beta of this stock be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

9. A stock has an expected return of 11.2 percent, its beta is .90, and the risk-free rate is 3.6 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

10. A stock has an expected return of 10.5 percent, a beta of 1.30, and the expected return on the market is 9.20 percent. What must the risk-free rate be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

11. A stock has a beta of 1.8 and an expected return of 15.1 percent. If the risk-free rate is 5.0 percent, what is the market risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)


Attachment:- homework_help6 (1).xlsx

Reference no: EM13848030

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