Explore BrainMass
Share

# Calculating the standard deviation,expected return,PV & PMT

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

The return distribution for the asset XYZ is as shown below:
Return Probability
- 0.1 0.10
+ 0.1 0.40
+0.20 0.30
+0.30 0.20

What is the standard deviation for the XYZ returns?
A. 0.0125
B. 0.1118
C. 0.0625
D. 0.0791

The beta of Microsoft's stock is 1.2, whereas the risk-free rate of return is 4 percent. Assume that the expected return on the market is 16 percent. Then, what is the expected return on Microsoft stock?
A. 8.80%
B. 28.00%
C. 18.40%
D. 23.20%

If you have a 3 year loan that requires \$1,000 payments each year at 7% annual interest rate what would be the present value of the loan?
A. \$2,624.32
B. \$3,000.00
C. \$3,210.00
D. \$2,803.74

Robert has a mortgage on his home of \$400,000 and has a fixed rate mortgage of 6.125% for 30 years. What would his monthly payments be for this loan?
A. \$2,041.67
B. \$2,596.55
C. \$2,430.45
D. \$2,788.46

What is the effective annual interest rate?
A. The simplest interest rate charged.
B. Rate that reflects compounding.
C. Rate with bank fees included.
D. Interest rate quoted by banks.

#### Solution Preview

Please refer attached file for better clarity of solutions.

The return distribution for the asset XYZ is as shown below:

Return Probability
- 0.1 0.10
+ 0.1 0.40
+0.20 0.30
+0.30 0.20

What is the standard deviation for the XYZ returns?
A. 0.0125
B. 0.1118
C. 0.0625
D. 0.0791