What is the correlation between returns of stock S and T, given that covariance between stocks is 2.419 and standard deviation are 1.23 and 2.21, respectively.
Q: Given the re-stated information below (and expected returns you should have already calculated),…
A: State Prob (Pi) Return A (Ra) Return B (Rb) Pi(Ra) Pi(Rb) Dep 0.1 -0.25 0.04 -0.025 0.004 Rec…
Q: From the following information, calculate covariance between stocks A and B and expected return and…
A: Correlation between A and B = 0.65 Weight of A in portfolio = 50% Weight of B in portfolio = 50%…
Q: The metric that is used to show the extent to which a given stock’s return move up and down with the…
A: A trend is the wide upward or downward movement of a stock's price over time. Upward movement is…
Q: a covariance of 0.011. If their respective standard deviations are 13% and 22%, what is their…
A: Given, Covariance = 0.011 Standard deviation of security 1 = 13% or 0.13 Standard deviation of…
Q: Estimate the return and standard deviation of the historical returns on Stock A that were: 15%, 20%,…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: Consider the two (excess return) index-model regression results for stocks A and B. The risk-free…
A: Data given: Rf= 4% Rm= 11% Sharpe ratio : It is defined as the portfolio risk premium divided by the…
Q: The covariance of the returns on the two securities, A and B, is -0.005. The standard deviation of…
A: Given, Covariance = -0.005 Standard deviation of A's Returns = 3% Standard deviation of B's returns…
Q: b) The covariance between stocks A and B is 0.0014, standard deviation of stock A is 0.032, and…
A: Returns do not rise in the proportion to the level of the risk assumed. Therefore, b the figure is…
Q: What is the standard deviation of Stock A returns given the information below about its returns…
A: Solution:- Standard deviation means the deviation of a value around its mean. Standard deviation in…
Q: a. What was the risk premium on common stock in each year? (Negative values should be entered with a…
A: Formulas: Risk premium = Stock market return - T bill return ----------------------------------…
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: Calculation of standard deviation for each stock: Answer: Standard deviation of A is 31.30% Standard…
Q: Between 1990 and 2000, the standard deviation of the returns for the NIKKEI and the DJIA indexes…
A: Formula for coefficient of correlation = Formula = Covariance / (standard deviation of NIKKEI *…
Q: ou are given the following information regarding prices for a sample of stocks. a. Construct a…
A: Price-Weighted Index = Sum of All Prices/Number of Stock Value-weighted Index = Total Value of…
Q: The table below contains the covariance matrix of stock returns and the market. Assume that the…
A: Risk is the possibility of loss for an organization and risk management is one of the most important…
Q: Expected return for the market, 12%; Standard deviation of market return, 21%; Risk-free rate, 8%;…
A: Formula to calculate Beta of stock is Beta = Correlation coefficient between Stock and the market*…
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: The question is based on the concept of co-variance calculation between stock and market index , in…
Q: Stocks A and B have the following returns: (Click on the following icon o in order to copy its…
A:
Q: If markets are efficient, what should be the correlation coefficient between stock returns for two…
A: Answer: In efficient markets, securities prices rapidly adapt to any new information coming into the…
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: The mathematical equation for correlation computation is:
Q: A stock’s returns have the following distribution: Calculate the stock’s expected return,…
A: Given:
Q: Which of the following shows the trade-off between expected profit (y-əxis) and in-stock probability…
A: The relationship between expected profit and probability is that for lower and higher expected…
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: Covariance is a statistical measure used to analyze the relationship between two variables.…
Q: Beta is which of the following: A) standard deviation. B) total risk. C) Beta is the relationship…
A: option C is correct Beta is the relationship which is between an investment's return, and the…
Q: uppose Johnson & Johnson and the Walgreen Company have expected returns and volatilities shown…
A: given Return of johnson & johnson = 7%
Q: b) The covariance between stocks A and B is 0.0014, standard deviation of stock A is 0.032, and…
A: Correlation determines how assets move in relation to each other. A coefficient of 1 means a perfect…
Q: a. what is return on each of the three shortlisted stock? and what is the standard deviation of the…
A: Here, Probability of Recession is 70% Probability of Normal is 20% Probability of Boom is 10%
Q: Stock A Stock B Market Standard Deviation Return Correlation Coefficient between A & M Correlation…
A: The Capital Asset Pricing Model(CAPM) refers to the relationship between expected return for assets…
Q: If the correlation between two stocks is .49 and the standard deviation of both stocks are 39% and…
A: Covariance between two stocks = Correlation between stocks *Standard deviation of stock 1*Standard…
Q: What does Beta measure and how is it interpreted? Explain the beta values of TSLA and JPM by…
A: In the financial market, the risk is categorized into two parts one is systematic and the second is…
Q: Stock M N O P Standard deviation 12% 20% 15% 30% 1. Which stock is the riskest?…
A: The relationship between the return and risk is direct. When risk of stock is more, return provided…
Q: When working with the CAPM, which of the following factors can be determined with the most…
A: As per the Capital Assets Pricing Model: Rf denotes to Risk-Free Rate of Return MRp denotes the…
Q: Stocks A and B have the following returns: Stock A Stock B 1 0.09 0.06 2 0.05 0.02 0.13 0.05 4 -…
A: A combination of the different types of funds and securities for the investment is term as the…
Q: Suppose you have the following expectations about the market condition and the returns on Stocks X…
A: Given:
Q: If two stocks have variance σ^2=16 each, could their covariance be equal to σ12 = 20
A: It has been provided that the value of variance for two stocks is 16 . Thus, the standard deviation…
Q: The standard deviation of a stock’s return is a measure of its? Multiple Choice systematic…
A: Financial management consists of directing, planning, organizing and controlling of financial…
Q: Two securities have a covariance of 0.076. If their respective standard deviations are 13% and 22%,…
A:
Q: When finding the covariance, should 2 stocks be used or can it be calculated using 1 stock and the…
A: Covariance is referred as the statistical toll, which helps in determining the relationship between…
Q: Consider information given in the table below and answers the question asked thereafter: State…
A:
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: Given information: Beta of stock A is 1.30 Beta of stock B is 1.60
Q: The covariance between the returns on two stock is 0.0425. The standard deviations of stocks A and B…
A: Covariance = 0.0425 Standard deviation of stock A = 0.2041 Standard deviation of stock B = 0.2944
Q: Firm A's stock returns are correlated with market returns at 0.90, while Firm B's stock returns are…
A: Solution:- Beta means the sensitivity of stock with respect to market.
Q: Given the following information, determine which beta coefficient for stock A is consistent with…
A: Expected return (rs) = 10.1% Risk free rate (rRF) = 3.2% Market return (rM) = 11.2%
Q: a. What are the expected returns of the two stocks? b. What are the standard deviations of the…
A: Expected return on a stock can be calculated as the mean of all returns on the stock. That is…
What is the correlation between returns of stock S and T, given that covariance between stocks is 2.419 and standard deviation are 1.23 and 2.21, respectively.
Step by step
Solved in 2 steps
- 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. The standard deviation of returns is 0.30 for Stock A and 0.20 for Stock B. The covariance betweenthe returns of A and B is 0.006. The correlation of returns between A and B is:the variance of stock A is .004, the variance of the market .007 and the covariance between the two is .0026. what is the correlation coefficient?
- If the standard deviation of stock 'A' is .25, the standard deviation of stock 'B' is .30, and the correlation between stocks 'A' and 'B' is 0.7, the covariance between stocks 'A' and 'B' is___.The covariance between the returns on two stock is 0.0425. The standard deviations of stocks A and B are 0.2041 and 0.2944, respectively. Calculate and interpret the correlations between the two assetsThe covariance of the market's returns with the stock's returns is 0.008. The standard deviation ofthe market's returns is 0.08, and the standard deviation of the stock's returns is 0. 11. What is thecorrelation coefficient of the returns of the stock and the returns of the market?
- If the correlation between two stocks is .49 and the standard deviation of both stocks are 39% and 12% respectively, what is the covariance (in percent) between the two stocks?(a) A stock’s returns have the following distribution: Calculate the stock’s expected return, standard deviation, and the coefficient of variation.(b) the standard deviation of the returns of the stocks A and B
- (c) Consider information given in the table below and answers the question asked thereafter: i. Calculate expected return on each stock? On the basis of this measure, which stock you will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of this measure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of this measure, which stock you will choose?iv. Calculate covariance and coefficient of correlation between the returns of the stocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfolio comprising of $35,000 invested in stock A and remaining amount in stock B. Calculate risk and return of your portfolio. (d) Firm A reports a Profit Margin of 6.5% and a Total Asset Turnover Ratio of 3.25. Their total asset level is $8,500,000. Assume there are 700,000 shares outstanding and the PE ratio is 11. Also, assume the Return on Equity is 16%. Based on this, calculate…When finding the covariance, should 2 stocks be used or can it be calculated using 1 stock and the market returns?Refer to the following observations for stock A and the market portfolio in the table:a) Calculate the main statistic measures to explain the relationship between stock Aand 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 andthe market.iv) The sample coefficient of determination associated with the stock A and the market.b) Draw in the characteristic line of the stock A and give the interpretation - whatdoes it show for the investor?c) Calculate the sample residual variance associated with stock’s A characteristic lineand 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?