Assume these are the stock market and Treasury bill returns for a 5-year period: Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
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Assume these are the stock market and Treasury bill returns for a 5-year period:
Required:
a. What was the risk premium on common stock in each year?
b. What was the average risk premium?
c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
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- Assume these are the stock market and Treasury bill returns for a 5-year period: Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Complete this question by entering your answers in the tabs below. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.Assume these are the stock market and Treasury bill returns for a 5-year period: Year 2016 2017 2018 2019 2020 Stock Market Return (%) 33.30 13.20 -3.50 14.50 23.80 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) 3 Required A Required B T-Bill Return Complete this question by entering your answers in the tabs below. Standard deviation (%) 0.12 0.12 0.12 0.07 0.09 x Answer is complete but not entirely correct. Required C What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. 13.69 X % घFrom the information attached below, calculate: a. the average stock return from 20x1- 20x3. b. The standard deviation over the same period.
- Q.Which of the following statements are true/false: I: The implied volatility of a stock can be calculated by deternining the standard deviation of stock returns over the last one year. II: The implied volatility of a stock can be calculated by deternining the standard deviation of stock returns over the last six months. A. I is true, II is false B. I is false, II is true C. I and II are both false D. I and II are both truea. Determine Stock X's beta coefficient. b. Determine the arithmetic average rates of return for Stock X and the NYSE over the period given. Calculate the standard deviations of returns for both Stock X and the NYSE. c. Assume that the required return on equity, re, for Stock X is equal to its average return. Likewise, assume that the market return is equal to the NYSE's average return. Using the information calculated, what is the assumed risk-free rate in the CAPM equation? Hint: Solve algebraically for rf in, re = r¡ + B(rm – r;)1.2. Refer to the following observations for stock A and the market portfolio in the table: Month Rate of return Stock A Market portfolio 1 0.30 0,12 0.24 0,08 3 -0,04 -0,10 -0,02 0,08 0,07 4 0,10 5 0,06 6 0,10 a) Calculate the main statistic measures to explain the relationship between stock A and the market portfolio: i) The sample covariance between rate of return for the stock A and the market. ii) The sample Beta factor of stock A. iii) The sample correlation coefficient between the rates of return of the stock A and the market. iv) The sample coefficient of determination associated with the stock A and the mar- ket. b) Draw in the characteristic line of the stock A and give the interpretation - what does it show for the investor? c) Calculate the sample residual variance associated with stock's A characteristic line and explain how the investor would interpret the number of this statistic. d) Do you recommend this stock for the investor with the lower tolerance of risk?
- Using the data in the following table,, estimate the: a. Average return and volatility for each stock. b. Covariance between the stocks. c. Correlation between these two stocks. a. Estimate the average return and volatility for each stock. The average return of stock A is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year Stock A 2010 2011 2012 2013 2014 2015 - 1% 6% 2% -5% 4% 6% Stock B 20% 9% 8% -3% - 5% 21% Print Done ☑ ClearUsing the data in the following table,, estimate the: a. Average return and volatility for each stock. b. Covariance between the stocks. c. Correlation between these two stocks. a. Estimate the average return and volatility for each stock. The average return of stock A is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 2010 2011 20% 2013 - 1% - 13% Stock A Stock B 20% 12% - 9% Print 2012 8% 9% C Done 2014 4% - 9% 2015 11% 27% - XConsider the following table for a period of six years: Year 123456 Large- Company Stocks - 16.09% -26.89 37.51 24.21 7.72 6.85 Returns U.S. Treasury Bills 7.57% 8.13 6.15 6.47 5.59 8.06
- Estimate the return and standard deviation of the historical returns on Stock A that were: 15%, 20%, 22%, 18% and 25%.Explain any two measures of risk using numerical examples.?What is the standard deviation of Stock B returns given the information below about its returns across future states of nature? Enter return in decimal form, rounded to 4th digit, as in "0.1234"The metric that is used to show the extent to which a given stock’s return move up and down with the stock market? a. Correlation b. Beta c. Standard deviation d. Expected return