Demand for the Company's Products Probability of this Demand Occurring Rate of Return if this Demand Occurs (30%) (14) Weak Below average Average Above average 0.1 0.1 11 0.3 0.3 45 Strong 0.2 1.0
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A stock’s returns have the following distribution:
Assume the risk-free rate is 2%. Calculate the stock’s expected return, standard deviation,
coefficient of variation, and Sharpe ratio.
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- Example 3 Inns oont alafrA Following Example 2, consider a porfolio with three assets S1, S2 and S3 which have expected rates of return 0.1,0.15 and 0.2 respectively, and variance-covariance matrix odni tanoma bszt a aitevi ot botoly 0.1 0.1 -0.1 0.1 0.2 0.1 ololles V = -0.1 0.1 0.6 vo ) isaas sod slais a at gaiteoo ottg ndi oda vodT (aldanoitesup als ot-lais wod ibuadala abnod on a) What is the optimal portfolio when up = worod of sidad = 0.2. adt yhalinie ini ba moe ja SOLUTION lo ano ot b) Use this piece of information and the earlier optimal portfolios from la aao e. Example 2 to find the quadratic equation relating of and up. ni bstni sd SOLUTION tar oad o bo s e) Hence draw a plot of the solutions, and identify the frontier port- Ldon to slar folios. it SOLUTION ods Btvni gatela dtComplete the table below using CAPM model Case Expected return RF RM Beta A ? % 10% 18% 0.8The lowest rate of return possible is:a. 0%b. -∞c. -100%d. the company’s MARR
- omplete the table below using CAPM model Case Expected return RF RM Beta B 9% 8% 10% ?Given the demand function D(p) /175 - 3p, Find the Elasticity of Demand at a price of $39 = At this price, we would say the demand is: Elastic Unitary O Inelastic Based on this, to increase revenue we should: Raise Prices Lower Prices Keep Prices UnchangedRefer to the following payoff table (values are profit): State of Nature Alternative S1 S2 A1 75 −40 A2 0 100 Prior Probability 0.6 0.4 What is the expected payoff of the decision strategy (i.e. using the EMV/EP criterion)?
- Don't use chatgpt, I will 5 upvotes The probability distribution of returns of Stutson Gheegi Manufacturing is presented below. what is the standard deviation of returns of Stutson Gheegi? (recurring content question) \table[[Probability,Return],[10%,28%Exhibit 7.1USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Rates of Return Year RA Computer Market Index 1 13 17 2 9 15 3 –11 6 4 10 8 5 11 10 6 6 12 Refer to Exhibit 7.1. The equation of the characteristic line for RA is a. RRA = –7.98 + 1.1023RMI. b. RRA = –9.41 + 1.3893RMI. c. RRA = –4.92 – 0.7715RMI. d. RRA = 11.63 + 1.2195RMI. e. RRA = 4.92 + 0.7715RMI.Translate the following monetary payoffs into utilities for a decision maker whose utility function is described by an exponential function with R = 250: –$200, –$100, $0, $100, $200, $300, $400, $500.
- A market demand function is given by the equation QD = 180 – 2P. Find the value of consumer surplus if price is equal to 65. Illustrate your demand curve and the area of consumer surplus. Identify the area of consumer surplus, the price at which demand is zero, the level of demand if price was zero and the slope (show calculation if required).Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? 500 (already answer) If there is an external benefit of $3, what is the efficient quantity? 700 (already answer) For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? 3 (already answer) Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the…Compute the expected rate of return on investment i given the followinginformation: Rf = 8%; E(RM) = 14%; βi = 1.0.b. Recalculate the required rate of return assuming βi is 1.8.