You find a certain stock that had returns of 15 percent, −22 percent, 23 percent, and 10 percent for four of the last five years. The average return of the stock over this period was 9.50 percent.
What was the stock's return for the missing year? (Round your answer to 1 decimal place. (e.g., 32.1))
Stock's return %
What is the standard deviation of the stock's return? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Standard deviation %© BrainMass Inc. brainmass.com October 25, 2018, 8:45 am ad1c9bdddf
The solution gives detailed steps on computing the stock's return and its standard deviation. All formula and calculations are shown and explained.
How to calculate the following- expected return and standard deviation of a portfolio, expected return of a stock using capital-asset-pricing model (CAPM),
Week 6 - Problem 1
10.6 Suppose the expected returns and standard deviations of stocks A and B are E(RA) = 0.17, E(RB) = 0.27, StdDevA = 0.12, and StdDevB = 0.21, respectively.
a. Calculate the expected return and standard deviation of a portfolio that is composed of 35 percent A and 65 percent B when the correlation between the returns on A and B is 0.6.
b. Calculate the standard deviation of a portfolio that is composed of 35 percent A and 65 percent B when the correlation coefficient between the returns on A and B is -0.6.
c. How does the correlation between the returns on A and B affect the standard deviation of the portfolio?
Week 6 - problem 2
Suppose the expected return on the market portfolio is 14.7 percent and the risk-free rate is 4.9 percent. Morrow Inc.stock has a beta of 1.3 . Assume the capital-asset-pricing model holds.
a. What is the expected return on Morrow's stock?
b. If the risk-free rate decreases to 4 percent, what is the expected return on Morrow's stock?
Week 6 - Problem 3
A portfolio that combines the risk-free asset and the market portfolio has an expected return of 22 percent and a standard deviation of 5 percent. The risk-free rate is 4.9 percent, and the expected return on the market portfolio is 19 percent. Assume the capital-asset-pricing model holds.
What expected rate of return would a security earn if it had a 0.6 correlation with the market portfolio and a standard deviation of 3 percent?View Full Posting Details