How is the probability and expected return calculated on a single stock?

Solution Preview

Hello

Please see the details as below.

Expected return is the mean (average) of the probability distribution of the returns. There are various methods to calculate the expected return. Let us look at the following example.

Returns from a stock (%) Probability
10 0.1
13 ...

Solution Summary

solution describes how to calculate probability and expected return on a single stock.

...Return Probability. ... Assume the expected return is 14.4 percent for Stock 1 and 15.9 percent for Stock 2. ... He expects to live to about 80, and wants to be able to ...

... Their estimated returns under varying market conditions ... What is the expected return for security A ... Security A Condition Probability Return return x Probability...

... (b) What would be the required rate of return if the beta were 1.25? 11. ...Expected Returns Scenario Probability Stock X Stock Y S1 0.3 10% 8% S2 0.4 16 ...

... document contains calculations of expected returns , standard deviations ...Probability rm rj Scenario 1 0.3 15 ... Average return = probability of scenario 1*return...

Calculate the expected rate of return and standard deviation of expected returns of stocks when the probability distribution of expected return are given. ...

Risk and Return: Expected, Deviation, Probabilities. 7.3 Expected returns: You have chosen biology as your ... However, you find that the probability of being ...

... of securities and the expected return and standard deviation of portfolios with different combinations of securities given the probability distribution of ...

... and correlation) Given the probability distributions of returns for stock X and stock Y, compute: Since Expected return = Where p is probability and x ...

... T-bill rate is 3.8%, what is the expected risk premium ... information about three stocks: State of Economy Probability of State of Rate of Return if State ...