Consider the following information: Calculate the expected return for Stock A. (

Question

Consider the following information:

Calculate the expected return for Stock A. (Do not round your intermediate calculations.)

8.80%

8.85%

10.49%

11.03%

7.90%

Calculate the expected return for Stock B. (Do not round your intermediate calculations.)

10.80%

8.67%

12.34%

10.26%

11.23%

Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)

3.92%

2.77%

4.12%

3.72%

4.08%

Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)

16.90%

11.95%

18.75%

16.06%

17.58%

Consider the following information:

Explanation / Answer

(a)Expected return for Stock A = 8.80%

= (4x0.20) + (8x0.60) + (16x0.20)

= 8.80%

(b)Expected return for Stock B = 10.80%

= (-20x0.20) + (14x0.60) + (32x0.20)

= 10.80%

(c)Standard deviation for Stock A = 3.92%

= Square root of [ {(4-8.80)2 x 0.20} + {(8-8.80) 2 x 0.60} + {(16-8.80) 2 x 0.20}]

= Square root of [15.36}

= 3.92%

(d)Standard deviation for Stock B = 16.90%

= Square root of [ {(-20-10.80)2 x 0.20} + {(14-10.80) 2 x 0.60} + {(32-10.80) 2 x 0.20}]

= Square root of [285.76}

= 16.90%

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.