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- Suppose the average return on Asset A is 6.6 percent and the standard deviation is 8.6 percent and the average return and standard deviation on Asset B are 3.8 percent and 3.2 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to answer the following questions. a. What is the probability that in any given year, the return on Asset A will be greater than 11 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the probability that in any given year, the return on Asset B will be greater than 11 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. In a particular year, the return on Asset A was −4.25 percent. How likely is it that such a low return will recur at some point in the future? (Do…uppose the average return on Asset A is 7.1 percent and the standard deviation is 8.3 percent, and the average return and standard deviation on Asset B are 4.2 percent and 3.6 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to answer the following questions. a. What is the probability that in any given year, the return on Asset A will be greater than 12 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the probability that in any given year, the return on Asset B will be greater than 12 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. In a particular year, the return on Asset A was −4.38 percent. How likely is it that such a low return will recur at some point in the future? (Do not round…The data presented below represents the expected returns on a financial asset in different seasons of the year. Season of year Probability Returns Spring 40% 2% Summer 35% 6% Winter 25% 10% What is the expected return on the asset? ii) What is the standard deviation on the asset? What is the covariance of the asset?
- The probability distributions of expected returns for the assets are shown in the following table: Asset A Prob Return 0.2 -5% 0.4 10% 0.4 15% a) Calculate the expected return for asset A. b) Calculate the standard deviation for asset A.Assuming the following returns and corresponding probabilities for Asset D: Rate of Return Probability 10% 30% 15% 40% 20% 30% Compute for: a. Expected rate of return b. The standard deviation c. The coefficient of variationAssume that you have obtained the following information for Asset A: Rate of Return Probability 5.5% 25% 7.25% 55% 11% 20% Compute the expected rate of return for Asset A, using the information provided in thechart above Assume that the standard deviation of the expected returns for Asset A is 1.87%. With information and the expected rate of return that you calculated for Asset A in Part A of this problem, compute the co-efficient of variation for Asset A.
- Which asset in the following table has the most market risk (also known as systematic or non- diversifiable risk)? Asset Return Beta Standard Deviation Asset A 11% 0.95 35% Asset B 13% 1.00 35% Asset C 9% 1.20 30% 1.) Asset C 2.) All three Assets 3.) Asset B 4.) Asset A and Asset B 5.) Asset ATwo investments generated the following annual returns (refer to image): a. What is the average annual return on each investment?b. What is the standard deviation of the return on investments X and Y?c. Based on the standard deviation, which investment was riskier?Two investments generated the following annual returns: % -Select- a. What is the average annual return on each investment? Round your answers to one decimal place. The average annual rate of return on X: The average annual rate of return on Y: b. What is the standard deviation of the return on investments X and Y? Round your answers to two decimal places. Standard deviation of X: % Standard deviation of Y: c. Based on the standard deviation, which investment was riskier? was riskier. 20X0 20X1 20X2 20X3 20X4 Investment X 11% 22 30 16 9 Investment Y 22% 24 10 13 12
- Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r, is 18.7%; and that the coefficient of variation, CV, is 1.88, answer the following questions: a. Find the standard deviation of returns, sigma Subscript rσr. b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence: (1) 68%, (2) 95%, (3) 99%.The following investments and probabilities are presented: INVESTMENT 1 Years yield probability 1 11 0.25 2 13 0.25 3 19 0.10 4 16 0.20 5 15 0.20 INVESTMENT 2 Years yield PROBABILITY 1 18 0.15 2 16 0.15 3 11 0.40 4 10 0.15 5 11 0.15 1 Calculate the expected return on each investment 2 Calculate the standard deviation of both investments and indicate which investment is riskier and why? 3 Calculate the coefficient of variation of both investments and indicate which investment is riskier and why? In this case it is…An asset has an average return of 10.79 percent and a standard deviation of 22.71 percent. What is the most you should expect to earn in any given year with a probability of 16 percent? Multiple Choice O 57.34% 33.50% 23.28% 34.63% 11.92%