Reference no: EM132853071
Questions -
Q1. Explain how different statistical measures of individual risk help managers and business owners make better decisions. For your answer, consider the following statistical measures of risk: probability distributions, expected rates of return, historical rates, standard deviation, coefficient of variation, and Sharpe's ratio.
Q2. Over the past 5 years, River Valley Industries has posted a 3% risk-free rate and the following return on stocks A and B:
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Year
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Stock A
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Stock B
|
|
1
|
17%
|
21%
|
|
2
|
28%
|
24%
|
|
3
|
-2.10
|
28%
|
|
4
|
5%
|
8%
|
|
5
|
21%
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27%
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Calculate the coefficient of variation for stocks A and B. Determine and explain what action has performed better.
Q3. Suppose New Investors Inc. has the following investment alternatives:
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Alternatives
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Probability
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Return
|
|
1
|
55%
|
30%
|
|
2
|
28%
|
12%
|
|
3
|
15%
|
10%
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Determine the expected return
Q4. Suppose you have invested $ 35,000 in stocks with a beta of 0.9 and another $ 17,000 invested in stocks with a volatility (beta) of 3.2%. Determines the volatility percentage (beta) of the portfolio.
Q5. Suppose the risk-free rate is 7.7% and the market return is 10%. Calculates the expected rate of return on a stock with a volatility (beta) of 3%.
Q6. Determine the expected rate of return for Campo Industries, assuming that the inflation rate will be 3.2%. Also, the risk-free rate is 2.2% and the market risk premium is 5.1%. The company has a beta of 1.7% and the rate of return for the last 4 years has been 7.6%.
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Calculate the direct material price and quantity variances
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What learned about as relates to vicarious trauma
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