standard deviation

standard deviation

stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
State of Economy Probability of Security Return
State of Economy If State Occurs
Recession .45 –7.50%
Normal .15 16
Boom .40 20
Expected return %
Sheet2
Problem 11-2
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
State of Economy Probability of Security Return
State of Economy If State Occurs
Recession .40 –6%
Normal .25 10
Boom .35 19
Standard deviation %
Sheet3
Problem 11-3
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. Assuming that all three states are equally likely. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
State of Security Return
Economy If State Occurs
Recession –7.5%
Normal 16
Boom 20
Standard deviation %
Sheet4
Problem 11-4
Security Returns If State Occurs
State of Probability of
Economy State of Economy Roll Ross
Bust 0.2 -13 % 17 %
Boom 0.8 24 6
Calculate the expected returns for Roll and Ross by filling in the following table (verify your answer by expressing returns as percentages as well as decimals): (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your E(R) answers to 2 decimal places and your Product answers to 4 decimal places. Omit the “%” sign in your response.)
Roll Ross

State of Economy Probability of Return If Product Return if Product
State of Economy State Occurs State Occurs
Bust 0.2 % %
Boom 0.8 % %

E(R) = % E(R) = %

Sheet5
Problem 11-6
Security Returns
If State Occurs
State of Probability of
Economy State of Economy Roll Ross
Bust 0.6 -14 % 15 %
Boom 0.4 32 5
Calculate the expected return on a portfolio of 30 percent Roll and 70 percent Ross by filling in the following table: (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)

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