1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
barxatty [35]
3 years ago
11

North Around, Inc. stock is expected to return 22 percent in a boom, 13 percent in a normal economy, and −15 percent in a recess

ion. The probabilities of a boom, normal economy, and a recession are 6 percent, 92 percent, and 2 percent, respectively. What is the standard deviation of the returns on this stock?
Business
1 answer:
almond37 [142]3 years ago
6 0

Answer:

4.53%

Explanation:

Data provided in the question:

Expected return = ∑ (Return × probability)

Thus,

Expected return = (0.06 × 22) + (0.92 × 13) + (0.02 × (-15))

= 12.98%

Now,

Probability       Return        Probability × (Return-Expected Return)²

0.06                  22                   0.06 × (22% - 12.98%)² = 4.8816

0.92                  13                    0.92 × (13% - 12.98%)² = 0.000368

0.02                  -15                   0.02 × (-15% - 12.98%)² = 5.657608

========================================================

                                                                            Total = 20.5396%

Standard deviation = \sqrt{\frac{\text{Total probability}\times(\text{Return-Expected Return})^2}{\text{Total probability}}

= √(20.5396)

= 4.53%

You might be interested in
Briefly describe an experiment that would test the premack differential probability principle
amm1812
An experiment that could test the Premack differential probability rule is as per the following; the kids are given two reaction choices, one for playing pinball machine and another for eating confection and these practices are evaluated to figured out which is more plausible for every kid. A portion of the youngsters who discovered to favor one movement. In the second period of the trial, the testing of the youngsters was directed with one oF the two systems. In the primary strategy, eating was a fortifying reaction while playing pinball was the instrumental reaction implying that the youngsters played pinball keeping in mind the end goal to eat the confection.
6 0
3 years ago
The stock of ABD, Inc. has a beta a 1.5 and an expected return of 11.6 percent. The expected return on the market is 11 percent.
GaryK [48]

Answer:

im sorry

Explanation:

8 0
3 years ago
Depreciation: Multiple Choice
Whitepunk [10]

Answer:

4. Estimates the decrease in the value of capital goods due to wear and tear over the year.

Explanation:

In accounting terms and in the business world, depreciation is defined as the systematic loss or reduction in value of a fixed asset or capital goods over time due to wear and tear. It is used in estimating the useful life or life expectancy of the asset. Examples of those fixed assets include, buildings, furniture, tractors, etc.

8 0
3 years ago
Why would firms that rely heavily on credit sales find factoring attractive?
lorasvet [3.4K]
From my understanding, factoring is a specific transaction in which a business sells its invoices to a factor, which is a third party commercial financial company. This process is completed so that the business can get cash quicker than it would to wait for a customer’s payment. With factoring, a company will have more<span>more more flexibility because the funds are not restricted, rather than having to deal with a typical bank loan</span><span />
5 0
3 years ago
Aaron has entered into a contract with wilson
swat32
Yes very true !!!!!!
8 0
3 years ago
Other questions:
  • When a third party knows that an agent is acting on behalf of a principal, but does not know the identity of the principal, the
    6·1 answer
  • Delos, Inc. reports the following information for​ April: Sigma Gamma Units sold 2 comma 000 units 800 units Sales price per uni
    9·1 answer
  • EXERCISE 6-3
    9·1 answer
  • A​ lump-sum purchase or basket purchase involves paying a single price for several assets as a group.
    8·1 answer
  • Exercise 9-5 Sandhill Co. purchased a new machine on October 1, 2017, at a cost of $80,010. The company estimated that the machi
    13·1 answer
  • Jipsom and Klark were partners with capital account balances of $80,000 and $100,000, respectively. Looney directly paid $32,000
    15·1 answer
  • Analyze the given scenario for potential ethical concerns.
    14·2 answers
  • 2. What are the ways of forecasting cost of sales?
    5·1 answer
  • Lunker Lures makes ten different models of fishing lures. All ten models are completely crafted by hand using the same basic mat
    8·1 answer
  • He wacc is the appropriate discount rate for use with ______ projects but should be adjusted ______ for higher risk ones
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!