Compute possible outcomes of probability distribution

Assignment Help Finance Basics

Reference no: EM1373105

In the following given questions the potential investment has following range of possible outcomes and probabilities: 10% probability of a -20 percent return, 40% probability of a 15 percent return, 40% probability of a 25 percent return, and a 10% probability of a 50 percent return. [A] Compute the weighted mean of the probability distribution; [B] Compute the variance of the probability distribution; [C] Compute the standard deviation of the probability distribution. [D] Compute the coefficient of variation of the probability distribution. [E] Would another investment having a coefficient of variation of .25 appear to offer a higher return / unit of risk?

Reference no: EM1373105

Questions Cloud

Stock valuation of a company : Determine the fair market value of Apple corporation (AAPL) stock values using RIM model and Price Ratio Analysis, given that Apple does not pay dividends?

Calculating risk premium : Suppose if WalMart has a beta of 1.1, current risk-free rate is 3.5%, average risk free rate over the last 70 years is 3.2 percent, and the expected return on the stock market is 12.3 percent,

Determine the price of a call option : A stock is at present valued at $24 a share, standard deviation of its return is 60 percent a year, and the risk free rate is 4% per year. The company pays $0.30 quarterly dividend per share.

Analyze the different ways that quality can be applied : Analyze and discuss the different ways that quality can be defined and applied within the operations context and what implications does this have for an organisations as it seeks to deliver a high-quality product or service

Compute possible outcomes of probability distribution : In the following given questions the potential investment has following range of possible outcomes and probabilities: 10% probability of a -20 percent return, 40% probability of a 15 percent return, 40% probability of a 25 percent return,

Risk adjusted rate of return on a stock : Describe why purchasing stocks with lowest price or earnings per share ratios may or may not be a good investment strategy.

Determine the value of equity : Pit Row Auto, a countrywide auto-parts chain, is planning purchasing a smaller chain, Southern Auto. Pit Row's analyst's project that the merger will result in incremental free cash flows and interest tax savings of $2 million in Year 1st

Computing cost of capital : A company is applying capital budgeting to a foreign investment opportunity in England. The risk free rate in England is 3.83% and risk free rate in the US is 3.56%.

Find the composite cost of capital : A company plans to increase $4 million through borrowing at an interest rate of 16% and to raise $1 million by issuing common stock. The company's stock has a beta coefficient of 2,

User Account

All Pages