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2 years ago

The expected return on a stock that is computed using economic probabilities is:_________

1 answer:

6 0

The expected return on a stock that is computed using economic probabilities is (D) a mathematical expectation based on a weighted average and not an actual anticipated outcome.

<h3>What is the weighted average?</h3>

The weighted arithmetic mean is similar to the ordinary arithmetic mean (the most common type of average) in that some data points contribute more than others to the final average.
The concept of the weighted mean is used in descriptive statistics and, in a broader sense, in several other areas of mathematics.
The expected return on a stock calculated using economic probabilities is a mathematical expectation based on a weighted average rather than an actual expected outcome.
For example, suppose an investor buys 100 shares of a company in year one for $10 and 50 shares in year two for $40.
To calculate the weighted average price paid, the investor multiplies 100 shares by $10 in year one and 50 shares by $40 in year two, then adds the results to get a total of $3,000.

Therefore, the expected return on a stock that is computed using economic probabilities is (D) a mathematical expectation based on a weighted average and not an actual anticipated outcome.

Know more about weighted average here:

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The complete question is given below:
The expected return on a stock that is computed using economic probabilities is:

A. guaranteed to equal the actual average return on the stock for the next five years.

B. guaranteed to be the minimum rate of return on the stock over the next two years.

C. guaranteed to equal the actual return for the immediate twelve-month period.

D. a mathematical expectation based on a weighted average and not an actual anticipated outcome.

E. the actual return you will receive.

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Rudik [331]

Answer:

Calculation of sales returns = 5% of $12,700,000 =$ 635,000

Actual price of sales returns = 60 % of $ 635,000= $ 381,000

Difference in price = $ 635,000- $ 381,000= $ 254,000

Sales Account $ 635,000 (dr)

Sundry Debtors / Customers Account $ 635,000 (cr)

Sales Returns or Allowances $ 245,000 (dr) ( difference in price)

Trading Profit & Loss Account $ 245,000 (cr)

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4 years ago

Chicken Can has net sales revenue of $1,420,000, cost of goods sold of $761,700, and all other expenses of $307,000. The beginni

kotykmax [81]

Answer:

The fixed asset turnover ratio is closest to 3.62.

Explanation:

The fixed asset turnover ratio can be calculated using the following formula:

Fixed asset turnover ratio = Net sales revenue / Average fixed assets …….. (1)

Where:

Net sales revenue = $1,420,000

Average fixed assets = (Beginning balance of fixed assets + Ending balance of fixed assets) / 2 = ($378,000 + $406,000) / 2 = $392,000

Substituting the values into equation (1), we have:

Fixed asset turnover ratio = $1,420,000 / $392,000 = 3.62

Therefore, the fixed asset turnover ratio is closest to 3.62.

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3 years ago

a While troubleshooting a problem, you realize the problem is caused by a complex series of issues that will affect a large numb

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The next step to undertake in the troubleshooting process is:

To document the incident

<h3>What is Troubleshooting?</h3>

This refers to the various ways through which a person assesses a problem and eliminates them.

In the troubleshooting process, we can see that there are various processes which includes: Information gathering, analysis, implementation, etc.

However, as the problem is caused by complex issues, it is best to document the incident so that it can be more carefully analysed.

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3 years ago

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4 years ago

Consider the following hypothetical facts about Mexico: The peso recently lost over 40% of its value relative to the dollar. Ove

UNO [17]

Answer:

The annualized return of the investment is R=0.286 or 28.6%.

Explanation:

The expected value takes into account all the possible outcomes and their probabilities. In this case, there are only 2 possible outcomes:

1) Mexican government lose control of the economy. Probability: 25%.

2) The Mexican government don't lose contol of the economy. Probability: 75%

In the Case 1, the local stock market will fall by 10% and the peso will lose 20%.

The return in dollars can be calculated as:

$R=(1+\Delta SM)/(1-\Delta P)-1=(1-0.10)/(1+0.2)-1\\\\R=0.90/1.20-1=0.75-1=-0.25$

being ΔSM the return of the stock market and ΔP the apreciation of the peso.

For the Case 2, we have that the local stock market will rise by 5% and the peso will appreciate by 5%.

The return in this case is

$R=(1+\Delta SM)/(1-\Delta P)-1=(1+0.05)/(1-0.10)-1\\\\R=1.05/0.90-1=1.17-1=0.17$

Then, the expected value is:

$E(R)=\sum p_iR_i=p_1R_1+p_2R_2=0.25*(-0.25)+0.75*(0.17)\\\\ E(X)=-0.0625+0.1275=0.065$

The expected dollar return in the 90 days is R=0.065.

If we annualized, the annual rate of return of this investment is:

$R_a=(1+R)^{N/n}-1=1.065^{360/90}-1\\\\R_a=1.065^4-1=1.286-1=0.286$

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3 years ago