Intro You've estimated the following expected returns for a stock, depending on the strength of the economy: State (s) Probability Expected return Recession -0.02 Normal Expansion Part 1 What is the expected return for the stock? 3+ decimals Submit 0.2 0.5 0.3 3+ decimals Part 2 What is the standard deviation of returns for the stock? Submit 0.09 0.14
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- Now assume that the stock is currently selling at $30.29. What is its expected rate of return?An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession 0.30 0.05-0.15 Normal 0.55 0.15 0.15 Boom 0.15 0.20 0.35 Calculate the expected return for the two stocks.
- You've estimated the following expected returns for a stock, depending on the strength of the economy: State (s) Probability Expected return Recession 0.1 -0.05 Normal 0.5 0.06 Expansion 0.4 0.11 What is the expected return for the stock? What is the standard deviation of returns for the stock?We know the following expected returns for stocks A and B, given the different states of the economy: State(s) Probability E(rA,s) E(rB,s) Recession 0.1-0.06 0.04 Normal 0.5 0.09 0.07 Expansion 0.4 0.17 0.11 What is the standard deviation of returns for stock B?Suppose your expectations regarding the stock price are as follows: State of the Market Probability Ending Price HPR (includingdividends) Boom 0.30 $ 140 53.5 % Normal growth 0.28 110 17.5 Recession 0.42 80 −12.0 Use the equations E(r)=Σsp(s)r(s)E(r)=Σsp(s)r(s) and σ2=Σsp(s) [r(s)−E(r)]2σ2=Σsp(s) [r(s)−E(r)]2 to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
- What is the standard deviation of the returns on a stock given the following information? Could you please show the work? State of Economy Probability of state of Economy Rate of return if state occurs Boom 0.3000 0.1500 Normal 0.6500 0.1200 Recession 0.0500 0.0600 Average 0.3333 0.1100Consider an event study of the following stock. Realised return Market return t = 0 (event day) 0.1 0.1 t =1 0.06 0.04 t = 2 0.03 0.02 t = 3 0.015 0.01 Suppose that the estimated market model is . What is the CAR (cumulative abnormal returns) for t = 3?1. The distribution of rates of return on XYZ stock is as follows Probability of State Occurring State of XYZ Stock Economy Return (%) Depression 0. 10 -4.5% Recession 0.20 4.4% Normal 0.50 12.0% Вoom 0.20 20.7% а. What is the expected return for the stock? b. What is the standard deviation of returns for the stock?
- Consider the following information: Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession .20 .010 −.35 Normal .55 .090 .25 Boom .25 .240 .48 Calculate the expected return for the two stocks. Calculate the standard deviation for the two stocks.Consider the following information on Stocks I and II: Probability of State of Rate of Return if State Occurs State of Economy Economy Stock I Stock II Recession Normal 0.30 8.03 -0.30 Irrational exuberance 0.30 0.40 8.37 0.31 8.14 0.47 The market risk premium is 8 percent and the risk-free rate is 40.5 percent. a-1. What is the beta of each stock? Note: Do not round Intermediate calculations. Round your answers to 2 decimal places. Stock I Stock I Beta a-2. Which stock has the most systematic risk? ○ Stock I ○ Stock Il b-1. What is the standard deviation of each stock? Note: Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Standard Deviation Stock I Stock I % b-2. Which one has the most unsystematic risk? ○ Stock I ○ Stock Il c. Which stock is "riskier"? ○ Stock I ○ Stock IlBased on the following information, calculate the expected return of Stock A: State of the Economy Probability of State Occurring Stock A Expected Return Recession 13. 0.20 0.052 Normal 0.50 0.080 Boom 0.30 0.139 Enter your answer as a decimal with a leading zero and 4 places of precision (i.e. 0.1234)