The Meaning and Measurement of Risk and Return
Posted: Thu May 19, 2022 5:30 am
The Meaning and Measurement of
Risk and Return
Question 1: Bay Land, Inc. has the following distribution of returns: State Retum Probability Boom 03 0.25 Normall 0.4 0.15 Bust 0.3 0.30 1. What is the expected return of the portfolio? 2. What is the standard deviation of the portfolio? Question 2: Answer the questions below using the following information on stocks A, B, and C. Stock ABS Beta 1822.8 Assume the risk-free rate of return is 3% and the expected market return is 12% According to CAPM, what is the required return for stocks A, B, and C? Page 2 of 2
Risk and Return
Question 1: Bay Land, Inc. has the following distribution of returns: State Retum Probability Boom 03 0.25 Normall 0.4 0.15 Bust 0.3 0.30 1. What is the expected return of the portfolio? 2. What is the standard deviation of the portfolio? Question 2: Answer the questions below using the following information on stocks A, B, and C. Stock ABS Beta 1822.8 Assume the risk-free rate of return is 3% and the expected market return is 12% According to CAPM, what is the required return for stocks A, B, and C? Page 2 of 2