Module 7 The Meaning and Measurement of Risk Assignment

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timer Asked: Feb 7th, 2019
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Question Description

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The Meaning and Measurement of Risk 

Complete the following problems:

  • Problem 7-1: Standard Deviation
  • Problem 7-2: Holding-Period Gain and Return
  • Problem 7-3: Capital Asset Pricing Model
  • Problem 7-4: Breakeven Point and Selling Price
  • Problem 7-5: Operating Leverage

You can access the problem details by excel file.

Direction:

Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit.

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Tutor Answer

tutoraxel
School: University of Maryland

Attached.

MODULE 7 CT PROBLEMS
THE MEANING AND MEASUREMENT OF RISK AND RETURN
CT 7 - 1
Chapter 6
STANDARD DEVIATION
Given the following probabilities and returns for UAE Corporation, find the Expected Return and
standard deviation.
DATA
PROBABILITY
RETURNS
0.15
5%
0.30
7%
0.40
12%
0.15
20%
Solution

Expected return

DEVIATION

10.65%

Deviation Squared
0.32%
0.13%
0.02%
0.87%
Variance
Standard Deviation

CT 7 - 2
HOLDING PERIOD GAIN AND RETURN

Probability
0.15
0.30
0.40
0.15

Probability x
Deviation
Squared
0.0479%
0.0400%
0.0073%
0.1311%
0.2263%
4.76%

Chapter 6

Suppose you purchased 30 shares of UAE Corporation stock for SAR 22.35 per share on February 1. On
O...

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Anonymous
Excellent job

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