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4. A stock had returns of 16 percent, 15 percent,...

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4. A stock had returns of 16 percent, 15 percent, 14 percent, -1 percent, 15 percent, and 20 percent over the last six years. Required: (a) What is the arithmetic return for the stock? a. 15.80% b. 13.27% c. 13.37% d. 13.82% e. 13.17% (b) What is the geometric return for the stock? a. 15.75% b. 12.96% c. 13.06% d. 12.76% e. 13.41% 14. Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Recession 0.20 0.05 -0.18 Normal 0.70 0.08 0.14 Boom 0.10 0.13 0.32 ________________________________________ Required: (a) Calculate the expected return for Stock A. (Do not round your intermediate calculations.) a. 8.22% b. 7.90% c. 8.69% d. 8.62% e. 8.30% (b) Calculate the expected return for Stock B. (Do not round your intermediate calculations.) a. 9.40% b. 9.33% c. 9.78% d. 9.87% e. 8.93% (c) Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.) a. 1.97% b. 2.17% c. 2.15% d. 1.46% e. 2.07% (d) Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.) a. 10.39% b. 15.29% c. 14.70% d. 15.43% e. 13.96% 22. The risk-free rate of return is 5 percent and the market risk premium is 8 percent. What is the expected rate of return on a stock with a beta of 1.40? a. 11.20% b. 12.00% c. 18.20% d. 16.20% e. 17.00%

Paper#13678 | Written in 18-Jul-2015

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