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

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Answer 1

Question

Chapter 8, Problem 8.9P

a)

Summary Introduction

To discuss:

Rate of return.

Introduction:

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

b)

Summary Introduction

To discuss:

Average Rate of return.

Introduction:

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

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

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

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

d)

Summary Introduction

To discuss:

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.

e)

Summary Introduction

To determine:

Investment decision

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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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Risk return exercise : D2L Assessment #7 DePaul, Inc. You are searching for a stock to add to your current stock portfolio. You are interested in DePaul, Inc. You realize that any time you consider a technology stock, it involves elevated risk. The rule you follow is to include only stocks with a coefficient of variation of returns below 1.02. You have obtained the following price information and dividend information: Year Starting Price $40.00 Ending price Quarterly Dividend 1 $42.00 $0.50 $42.00 $47.40 $0.75 3 $47.40 $43.40 $1.00 4 $43.40 $53.40 $1.25 a. Calculate the annual rate of return for each year, 1 through 4, for DePaul stock b. Assume that each year's return is equally probable and calculate the average return over this time period. Calculate the standard deviation of returns over the 4 years. Based on b and c determine the coefficient of variation of returns for the security. Does an investment in this stock fall within the parameters of your investment policy? С. d. e.

For DePaul Inc. what is the return for year 2. Round to no decimal points and use the % symbol (27%...not 27.12%)

Question: You are an investment advisor. You currently own two stocks, A and B, with the following characteristics: Expected Return Beta X 10% 0.8 Y 16% 1.5 The current risk-free rate is 2 percent, and the expected return on the market is 12 percent. How would you change your holdings of the two stocks (i.e., for each, would you sell or buy more)? Show your calculations (and explain). Stock A: Stock B:

Answer 2

Question

Chapter 8, Problem 8.9P

a)

Summary Introduction

To discuss:

Rate of return.

Introduction:

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

b)

Summary Introduction

To discuss:

Average Rate of return.

Introduction:

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

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

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

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

d)

Summary Introduction

To discuss:

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.

e)

Summary Introduction

To determine:

Investment decision

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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 8.9P

a)

Summary Introduction

To discuss:

Rate of return.

Introduction:

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

b)

Summary Introduction

To discuss:

Average Rate of return.

Introduction:

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

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

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

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

d)

Summary Introduction

To discuss:

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.

e)

Summary Introduction

To determine:

Investment decision

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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 8.9P

a)

Summary Introduction

To discuss:

Rate of return.

Introduction:

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

b)

Summary Introduction

To discuss:

Average Rate of return.

Introduction:

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

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

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

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

d)

Summary Introduction

To discuss:

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.

e)

Summary Introduction

To determine:

Investment decision

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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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Answer 5

Chapter 8, Problem 8.9P

a)

Summary Introduction

To discuss:

Rate of return.

Introduction:

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

b)

Summary Introduction

To discuss:

Average Rate of return.

Introduction:

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

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

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

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

d)

Summary Introduction

To discuss:

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.

e)

Summary Introduction

To determine:

Investment decision

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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 8.9P

a)

Summary Introduction

To discuss:

Rate of return.

Introduction:

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

Answer 7

Chapter 8, Problem 8.9P

a)

Summary Introduction

To discuss:

Rate of 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:

Average Rate of return.

Introduction:

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

Answer 9

b)

Summary Introduction

To discuss:

Average Rate of return.

Introduction:

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

Answer 10

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

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

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

Answer 11

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

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

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

Answer 12

d)

Summary Introduction

To discuss:

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 13

d)

Summary Introduction

To discuss:

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 14

e)

Summary Introduction

To determine:

Investment decision

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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 15

e)

Summary Introduction

To determine:

Investment decision

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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 16

Expert Solution & Answer

Answer 17

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Answer 18

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Answer 19

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...

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

Solution Summary: The author explains that the rate of return on an investment can be calculated using the following formula: cRate of Return=left.

To discuss:

Rate of return.

Introduction:

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

To discuss:

Average Rate of return.

Introduction:

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

To discuss:

Standard deviation.

Introduction:

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

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

To discuss:

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

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

Solution Summary: The author explains that the rate of return on an investment can be calculated using the following formula: cRate of Return=left.

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

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

To discuss: Standard deviation. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment. The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

To discuss: 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:

Rate of return.

Introduction:

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

To discuss:

Average Rate of return.

Introduction:

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

To discuss:

Standard deviation.

Introduction:

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

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

To discuss:

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.