The question is incomplete. Here is the complete question:
The following annual returns for Stock E are projected over the next year for three possible states of the economy. What is the stock’s expected return and standard deviation of returns? E(R) = 8.5% ; σ = 22.70%; mean = $7.50; standard deviation = $2.50
State Prob E(R)
Boom 10% 40%
Normal 60% 20%
Recession
30% - 25%
Answer:
The expected return of the stock E(R) is 8.5%.
The standard deviation of the returns is 22.7%
Explanation:
<u>Expected return</u>
The expected return of the stock can be calculated by multiplying the stock's expected return E(R) in each state of economy by the probability of that state.
The expected return E(R) = (0.4 * 0.1) + (0.2 * 0.6) + (-0.25 * 0.3)
The expected return E(R) = 0.04 + 0.12 -0.075 = 0.085 or 8.5%
<u>Standard Deviation of returns</u>
The standard deviation is a measure of total risk. It measures the volatility of the stock's expected return. The standard deviation (SD) of a stock's return can be calculated by using the following formula:
SD = √(rA - E(R))² * (pA) + (rB - E(R))² * (pB) + ... + (rN - E(R))² * (pN)
Where,
- rA, rB to rN is the return under event A, B to N.
- pA, pB to pN is the probability of these events to occur
- E(R) is the expected return of the stock
Here, the events are the state of economy.
So, SD = √(0.4 - 0.085)² * (0.1) + (0.2 - 0.085)² * (0.6) + (-0.25 - 0.085)² * (0.3)
SD = 0.22699 or 22.699% rounded off to 22.70%
Answer:
a. $144 million
Explanation:
The computation of the amount of money raised is shown below:
But before that we have to find out the amount raised and underwriting fees which is given below:
Amount raised by company is
= 4 million × $37.5
= $150 million
And,
underwriting fees is
= $150 million × 4%
= $6 million
So, amount raised by the company is
= $150 million - $6 million
= $144 million
We deduct the underwriting fees from the raised amount
Answer:
FV= $1,259.71
Explanation:
Giving the following information:
Initial deposit (PV)= $1,000
Number of periods (n)= 3 biannual years
Interest rate (i)= 8% = 0.08
<u>To calculate the future value (FV), we need to use the following formula:</u>
FV= PV*(1+i)^n
FV= 1,000*(1.08^3)
FV= $1,259.71
Using the "Thinking at Margin" methodology, the relevant statement for a television maker to consider while making a choice is as follows: the average cost of ten TVs is one hundred dollars apiece. Option C. This will be discussed in further detail below.
<h3>What exactly does "Thinking at Margin" entail?</h3>
In most cases, it means giving some consideration to the action that will come next in your plan. The word "marginal" may also be used to signify "additional." The first glass of lemonade you drink on a hot day will quench your thirst, but successive glasses may not have the same impact on you.
When you contemplate at the margin, you are considering what the next or succeeding action will mean for you on an individual level.
In conclusion, using the "Thinking at Margin" technique, the following are the essential points for a television producer to take into consideration before making a decision when it comes to television programming: The usual cost of creating ten televisions is one thousand dollars each. Alternative C
Learn more about Thinking at the Margins by visiting this link: brainly.com/question/4468044 #SPJ1
Answer:
Because the United States interest moved up and Indian Rupees depends mostly on the capital from the United States of America.
Explanation:
So, about the Indian rupees there are things we must note; (1). The inflation on Indian Rupees is high, (2). The problem of deficit account by the Rupee.
The two problems mentioned above are the problems that made Indian Rupees to rest or relent mostly on the United States of America Fed's cash flow. So, when U.S. Fed announced that it would begin to wind down its economic stimulus program the value of Indian Rupees DECREASES.