Calculate the expected returns for stock

Assignment Help Financial Management

Reference no: EM131911704

John is thinking about investing his money in the stock market. He has the following three stocks in mind: stock A, B, and C. He knows that the economy is expected to behave according to the following table. He believes that the likelihood of each scenario is identical (all states of nature have equal probabilities. He also knows the following about his stocks:

State of the Economy RA RB RC

Depression -20% 5% –5%

Recession 10% 20% 5%

Normal 30% -12% 5%

Boom 50% 9% -3%

1. Calculate the expected returns for stock A, B, and C and the risk(standard deviation for stock A, B, and C.

Reference no: EM131911704

Questions Cloud

Goldrich obtained note from curtis by fraudulent means : Goldrich obtained a note from Curtis by fraudulent means. Suppose that Madson transfers the note back to Goldrich. Dicuss Curtis’s and Goldrich’s positions.

What is the combination : If you can’t sell a share short, you can achieve exactly the same final payoff by a combination of risk free bonds and options. What is the combination?

How would you build well-diversified portfolio : How would you build a well-diversified portfolio? How many individual investments does it take?

Find market value of bonds using semiannual analysis : Find the market value of the bonds using semiannual analysis.

Calculate the expected returns for stock : John is thinking about investing his money in the stock market. Calculate the expected returns for stock A, B, and C and the risk

Possible outcomes for the value of stock after three months : If the current price is $400, use a binomial tree to determine the possible outcomes for the value of the stock after three months.

Create budgeted income statement with budgeted : Prepare a monthly master budget for Fogle for the year ended Manufacturing Overhead Budget, Create a budgeted income statement with a budgeted

What is the expected return on market : The expected return for OK Energy is 7.8% and the risk-free rate is 1.6%. what is the expected return on the market (Rm)?

How many contracts do you buy or sell : The multiplier on Treasury note futures is $100,000. How many contracts do you buy or sell?

User Account

All Pages