Calculate the covariance between their returns

Assignment Help Financial Accounting
Reference no: EM132475014

Point 1: You believe that there is a 40 percent chance that stock A will decline by 10 percent and a 60 percent chance that it will rise by 20 percent.

Point 2: Correspondingly, there is a 30 percent chance that stock B will decline by 10 percent and a 70 percent chance that it will rise by 20 percent.

Point 3: The correlation coefficient between the two stocks is 0.70.

Question 1: Calculate the expected return, the variance, and the standard deviation for each stock. Then calculate the covariance between their returns.

Reference no: EM132475014

Questions Cloud

What are some of the inputs to production : What are some of the inputs to production that Michael must manage within his supply chain?
Financial risk simulation exercise assignment : McTavish and Company - A financial risk simulation exercise Assignment Help and Solution, Glasgow Caledonian University - Assessment Writing Service
How much of the first payment made on december : On December 1, 2019, Driscoll, Inc. signed a 10 year mortgage, How much of the first payment made on December 31, 2019, is allocated to repayment of principal
Service delivery process for marketing a product : What are the most common possible contact point failures in the service delivery process for marketing a product
Calculate the covariance between their returns : Calculate the expected return, the variance, and the standard deviation for each stock. Then calculate the covariance between their returns.
What is the firms expected value in one year : What are the expected dividend yield, capital gains yield and total return during the first year? What is the firm's expected value in one year?
Determine what annual coupon rate is being offered : Determine if bonds pay interest semi-annually and the market requires that they offer a 10% annual rate of return, what annual coupon rate is being offered?
7d cinema theatre - situation analysis : 7D Cinema theatre opens in Oman - VOX Cinema Situation Analysis - The Market, Competition & Customers PESTEL analysis *Opportunities and Threats
Determine and calculate ending inventory : Determine and Calculate ending inventory, cost of goods sold, gross profit, and gross profit rate under each of the methods. with example

Reviews

Write a Review

Financial Accounting Questions & Answers

  Annuity earnings-what will future value of his account equal

Annuity Earnings: Sam is saving money in an annuity and is earning 5% annual interest compounded annually. If he deposits $2,500 in the account each year for 10 years, what will the future value of his account equal? How much interest will he have ea..

  Calculate amount of net accounts receivable after bad debts

The following information is from the records of Pangolin Camera? Shop: Accounts? Receivable, December? 31, 2017 $20,000? (debit) Allowance for Bad? Debts, December? 31, 2017 prior to adjustment 1,000? (debit) Net credit sales for 2017 91,000 Account..

  Amortization of intangibles

Amortization of Intangibles. For each of the following intangible assets, indicate the amount of amortization expense that should be recorded for the year 2016 and the amount of accumulated amortization on the balance sheet as of December 31, 2016.

  Business bad debt is deductible for tax purposes

A business bad debt is deductible for tax purposes as a(n):

  Compute the return on investment for the current year

Compute the return on investment (ROI) for the current year. Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round to one decimal.)

  Particular business transaction

Which of the following is possible for a particular business transaction?

  Calculate the amount of depreciation for month of october

Calculate the amount of depreciation for the month of October using the? straight-line depreciation method.

  Prepare the general journal entries for any amortization

A tract of land was acquired for $200,000 as a potential future building site from Flopper Corp. A plant facility consisting of land and building was acquired from Slick Company in exchange for 20,000 shares of Flopper's common stock. Prepare the Gen..

  Transactions pertaining to investments in common stock

Nosker Inc. had the following transactions pertaining to investments in common stock. Jan. 1 Purchased 4,400 shares of Escalante Corporation common stock (5%) for $246,400 cash. July 1 Received a cash dividend of $3 per share. Dec. 1 Sold 880 shares ..

  Acquisition cost-determine the acquisition cost of equipment

On January 1, 2012, Pearl Inc. purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase: Terms of the purchase were 2/10, net 30. Pearl paid for the purchase on January 8. Freight costs..

  Which is the best form for operating the business

Jordan and her brother, Jason, purchase a hardware store from a local bank which acquired it through foreclosure. Because the bank wants to sell the business, Jordan and Jason can buy it for only $160,000. Jordan will invest $42,000 and own 70% of th..

  Why is it necessary for officials to be accountable

Standards directed to governmental and non-profit organizations also help officials demonstrate to their constituents their accountability and stewardship over public resources. Why is it necessary for officials to be accountable?

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