Average return Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

Question

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Answer 1

Question

Chapter 8, Problem 8.11P

a)

Summary Introduction

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

c)

Summary Introduction

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

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The probability distributions of expected returns for the assets are shown in the following table: Asset A Prob Return 0.2 -5% 0.4 10% 0.4 15% a) Calculate the expected return for asset A. b) Calculate the standard deviation for asset A.

Assume that you have obtained the following information for Asset A: Rate of Return Probability 5.5% 25% 7.25% 55% 11% 20% Compute the expected rate of return for Asset A, using the information provided in thechart above Assume that the standard deviation of the expected returns for Asset A is 1.87%. With information and the expected rate of return that you calculated for Asset A in Part A of this problem, compute the co-efficient of variation for Asset A.

You have data on the following assets: asset Expected return Standard DeviationA 15.0% 21.0%B 15.5% 20.2%C 18.0% 25.0% Calculate the coefficient of variation for each of the assets. Which one is the best investment option?

Answer 2

Question

Chapter 8, Problem 8.11P

a)

Summary Introduction

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

c)

Summary Introduction

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8.11P

a)

Summary Introduction

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

c)

Summary Introduction

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.11P

a)

Summary Introduction

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

c)

Summary Introduction

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.11P

a)

Summary Introduction

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

c)

Summary Introduction

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Answer 6

Chapter 8, Problem 8.11P

a)

Summary Introduction

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 7

Chapter 8, Problem 8.11P

a)

Summary Introduction

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 8

b)

Summary Introduction

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

Answer 9

b)

Summary Introduction

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

Answer 10

c)

Summary Introduction

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Answer 11

c)

Summary Introduction

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQ Ch. 8.1 - Compare the following risk preferences: (a) risk...Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQ Ch. 8.2 - Prob. 8.6RQ Ch. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQ Ch. 8.3 - How does international diversification enhance...

Average return Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

Solution Summary: The author explains that return is a percentage that represents the profit in an investment.

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Want to see the full answer?

Chapter 8 Solutions

Average return Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

Solution Summary: The author explains that return is a percentage that represents the profit in an investment.

To discuss: Average return Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss: Standard deviation Introduction: The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

To determine: Coefficient of variation. Introduction: The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.

Want to see the full answer?

Chapter 8 Solutions

To discuss:

Average return

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Standard deviation

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

To determine:

Coefficient of variation.

Introduction:

The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.