Suppose your expectations regarding the stock market are as follows:State of the EconomyBoomNormal growthRecessionProbability0.30.60.1MeanStandard deviationHPR24.90 %%41%24E (r) E-1P(s)r (s)Var (r) = o² = s-1p(s)[r (s) - E(r)]²SD (r) = o = √Var (r)Required:Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculationRound your answers to 2 decimal places.)-18K

Mean returns give the expected return on a stock or a portfolio taking into consideration the…

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 E (r) = Σs-1 P(s)r (s) Var (r) = o² = Σs=1P (s)[r (s) — E (r)]² SD (r)=o= √Var (r) Mean Standard deviation HPR 24.90 % % 41% Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculation Round your answers to 2 decimal places.) 24 -18

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 E (r) = Σs-1 P(s)r (s) Var (r) = o² = Σs=1P (s)[r (s) — E (r)]² SD (r)=o= √Var (r) Mean Standard deviation HPR 24.90 % % 41% Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculation Round your answers to 2 decimal places.) 24 -18

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Suppose your expectations regarding the stock price are as follows: State of the Market Probability Ending Price HPR (includingdividends) Boom 0.30 $ 140 53.5 % Normal growth 0.28 110 17.5 Recession 0.42 80 −12.0 Use the equations E(r)=Σsp(s)r(s)E(r)=Σsp(s)r(s) and σ2=Σsp(s) [r(s)−E(r)]2σ2=Σsp(s) [r(s)−E(r)]2 to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.2 42% Normal growth 0.6 23 Recession 0.2-17 E(r) = Σss = 1p(s)r( s) Var(r)=\sigma 2 = Σss = 1p(s)[r(s)-E(r)]2 SD (r)=\sigma = Var(r) ✓ Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession HPR (including Probability Ending Price dividends 0.20 $ 140 47.5% 0.29 110 13.0 0.51 80 -20.0 Use the equations E (r) = Ep (s) r(s) and o² = Σp (s) [r(s) – E(r)]² to compute the mean and standard deviation of the HPR on stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Mean Standard deviation % %
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession E(r) p(s)r(s) = Probability HPR 0.4 43% 0.5 23 0.1 -16 Var (r) = P(s)[r(s) - E(r)]² = SD (r) ==√√Var (r) Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mean Standard deviation % %
Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession Probability Ending Price 0.26 $ 140 0.25 110 0.49 80 Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) — E(r)]² to compute the mean and standard deviation of the HPR on - S S Mean Standard deviation HPR (including dividends) 55.0% 21.0 -16.0 stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. % %
Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession Probability Ending Price 0.21 $ 140 0.30 110 0.49 80 Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) - E(r)]² to compute the mean and standard deviation of the HPR on S S HPR (including dividends) 50.5% 18.0 -12.5 stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Mean Standard deviation Answer is complete but not entirely correct. 13.65 % 20.48 %
Consider an event study of the following stock. Realised return Market return t = 0 (event day) 0.1 0.1 t =1 0.06 0.04 t = 2 0.03 0.02 t = 3 0.015 0.01 Suppose that the estimated market model is . What is the CAR (cumulative abnormal returns) for t = 3?
Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession 0.30 0.05-0.15 Normal 0.55 0.15 0.15 Boom 0.15 0.20 0.35 Calculate the expected return for the two stocks.
Suppose your expectations regarding the stock price are as follows: HPR (including dividends) 50.5% 20.5 -18.5 State of the Market Boom Normal growth Recession Probability 0.20 0.22 0.58 Mean Standard deviation - Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) — E(r)]² to compute the mean and standard deviation of the HPR on S S stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Ending Price $ 140 110 80 % %
What is the standard deviation of the returns on a stock given the following information? Could you please show the work? State of Economy Probability of state of Economy Rate of return if state occurs Boom 0.3000 0.1500 Normal 0.6500 0.1200 Recession 0.0500 0.0600 Average 0.3333 0.1100
Suppose you observe the following situation: Probability of State 0.25 0.45 0.30 State of Economy Recession Normal Irrational exuberance Stock A Stock B % % Rate of Return if State Occurs Stock B Stock A a. Calculate the expected return on each stock. (Round the final answers to 2 decimal places.) Expected Return % -0.12 0.09 0.44 -0.10 0.09 0.24 b. Assuming the capital asset pricing model holds and stock A's beta is greater than stock B's beta by 0.75, what is the expected market risk premium? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected market risk premium
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession E (r) = Σs=1 P(s)r(s) Var (r) = ² = Probability 0.3 0.4 0.3 Σs ₁ p (s)[r (s)- E (r)]² HPR 44% 14 -16 SD (r) = 0 = Var (r) Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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