# Finance MBA help Risk and Return

**Question description**

1.

What is the expected return for an asset with the following probabilities and returns:

Economy Probability Return

Poor 10% -20%

Sluggish 25% -5%

Moderate 30% 12%

Good 25% 24%

Boom 10% 55%

2.

What is the standard deviation of the returns for a stock with the following probabilities and returns:

Economy Probability Return

Poor 10% -20%

Sluggish 25% -5%

Moderate 30% 12%

Good 25% 24%

Boom 10% 55%

3.

What is the expected return for an asset with annual returns for the last 12 years of:

4.5%

6.9%

-13.2%

18.9%

24.9%

-3.8%

14.2%

-18.7%

1.9%

6.8%

14.1%

37.2%

4.

What is the standard deviation for the following sample of asset returns:

4.5%

6.9%

-13.2%

18.9%

24.9%

-3.8%

14.2%

-18.7%

1.9%

6.8%

14.1%

37.2%

5.

What is the portfolio beta for a pool of investments as follows:

Asset Investment Beta

A $1,000 .75

B $2,000 1.20

C $3,000 1.95

6.

What is the beta for an asset with an expected return of 12.5% if the risk free rate is 2.0% and the market risk premium is 7.5%?

7.

What is the expected return for an asset with a beta of 1.1 if the risk free rate is 1.5% and the required rate of return on the market is 9.5%?

8.

The tighter the probability distribution of its expected future returns, the greater the risk of a given investment as measured by its standard deviation.

9.

You are considering investing in one of the these three stocks:

Stock | Standard Deviation | Beta |

A | 20% | 0.59 |

B | 10% | 0.61 |

C | 12% | 1.29 |

If you are a strict risk minimizer, you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio.

10.

Stock A's beta is 1.7 and Stock B's beta is 0.7. Which of the following statements must be true about these securities? (Assume market equilibrium.)

11.

Which of the following statements is CORRECT?

## Tutor Answer

## Review from our student for this Answer

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors