Calculate the expected return for the two stocks

Assignment Help Financial Management
Reference no: EM13927752

Consider the following information: Rate of Return if State Occurs State of Probability of State Economy of Economy Stock A Stock B Recession .24 .055 –.44 Normal .64 .135 .34 Boom .12 .330 .57 Requirement 1: Calculate the expected return for the two stocks. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Expected return E(RA) % E(RB) % Requirement 2: Calculate the standard deviation for the two stocks. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Standard deviation σA % σB %

Reference no: EM13927752

Questions Cloud

The expected return on the market : A stock has a beta of 1.23, the expected return on the market is 11.9 percent, and the risk-free rate is 4.6 percent. Required: What must the expected return on this stock be?
What additional annual cost is the shop incurring by staying : What additional annual cost is the shop incurring by staying with this order size? Other than cost savings, what benefit would using the optimal order quantity yield?
What is the expected return of the portfolio : Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .17 .352 .452 .332 Good .43 .122 .102 .172 Poor .33 .012 .022 −.052 Bust .07 −.112 −.252 −.092 Requiremen..
Discretionary financing accounts include : Discretionary financing accounts include all of the following EXCEPT
Calculate the expected return for the two stocks : Consider the following information: Rate of Return if State Occurs State of Probability of State Economy of Economy Stock A Stock B Recession .24 .055 –.44 Normal .64 .135 .34 Boom .12 .330 .57 Requirement 1: Calculate the expected return for the two..
Compute the total annual cost using your order size : What order size would minimize the sum of annual ordering and carrying costs? Compute the total annual cost using your order size from part a.
What is the expected return on the portfolio : You own a portfolio that has $1,900 invested in Stock A and $3,000 invested in Stock B. Assume the expected returns on these stocks are 8 percent and 14 percent, respectively. Required: What is the expected return on the portfolio? (Do not round inte..
What is the average number of bags on hand : Determine the economic order quantity What is the average number of bags on hand? How many orders per year will there be?
Determine the percentage of items in each category : Given the monthly usages in the following table, classify the items in A, B, and C categories according to dollar usage Determine the percentage of items in each category and the annual dollar value for each category for part b.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the value of the current assets

Sunset, Inc., has a book value of equity of $14,340. Long-term debt is $8,300. Net working capital, other than cash, is $2,190. Fixed assets are $19,810 and current liabilities are $1,790. How much cash does the company have? What is the value of the..

  According to the capital asset pricing model

You want to add an additional stock to your portfolio and are considering two alternatives. For stock A, the expected return is 14.20% and the beta is 1.62. For stock B, the expected return is 8.40% and the beta is 0.46. According to the Capital Asse..

  What is the bonds conversion ratio and value

The following data apply to Saunders Corporation’s convertible bonds. What is the bond’s conversion ratio? What is the bond’s conversion value? What is the bond’s straight-debt value?

  What is EAR implied in each option

Suppose you plan to borrow $10000 from the bank and have two options to pay back: What is EAR implied in each option? Which one do you prefer and explain why?

  Annuity is equal to the present value-retirement account

Suppose you deposit $20,000 at the end of each of the next 30 years into a retirement account. Immediately after your last deposit, you take the entire accumulated value in your account and purchase a 20-year annuity, which will pay you X at the begi..

  Spread across three funds

Erin invests $3750 spread across three funds; Fund A, Fund B, and Fund C. Over the course of the following year, A(in dollars) was equal to %20 of the total return from all three funds fir the year. The amount invested in Fund B was equal to 1.2 time..

  Calculate the cost of capital for rio tinto

Calculate the cost of capital for Rio Tinto and state two reasons for why it may have declined since the GFC. Justify your answers using theory, calculations and research into current events.

  Consider an annual coupon bond with face value

Consider an annual coupon bond with a face value of $100, 12 years to maturity, and a price of $95. The coupon rate on the bond is 4%. If you can reinvest coupons at rate of 2% per annum, then how much money do you have if you hold the bond to maturi..

  Whats the value of the stock under the perpetual ddm

A company pays a dividend of $1.95 and it’s expected to grow at 5.5% for the foreseeable future. Your required rate of return is 11.8%. What's the value of the stock under the perpetual DDM?

  Annual dividend on its common stock

Southern Markets recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for $26.91 a share. What is the market rate of return?

  What are the annual deposits in years

Suppose that the parents of a young child decide to make annual deposits into a savings account with the first deposit on the 5th birthday and the last on the 15th birthday.

  Expected average percentage return on savings

A couple has just given birth to a baby and named him Jimmy. They want to setup a college savings account for Jimmy and start saving for his college education. How much will you need at the end of 18 years to fund Jimmy's college education for 4 year..

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