tudent/Player 1 est.aspx?testld 1/0395339&centerwn; n yes MBA615 Managerial Fina

Question

tudent/Player 1 est.aspx?testld 1/0395339&centerwn; n yes MBA615 Managerial Finance DLAF2P2017 Quiz: Unit 5 Quiz This Question: 4 pts 4 of 15 This Graph/Chart The figure in the popup window,shows the one-year return distribution for RCS stock Calculate a. The expected returm of the eturm Note: Make sure to round all intermediate calculations to at least five decimal places a. The expected retun. The expected return is% (Round to two decimal places) b. The standard deviation of the return. The standard deviation is %. (Round to two decimal places) retum 8-15% return C: 0% return D: 15% return Print Done Enter your answer in each of the answer boxes Save for Later DELL

Explanation / Answer

Solution :-

Expected Return = 5.75%

Standard Deviation of the Return = 17.8%

Stock Return Probability Probability Adjusted Return Deviation Square A -0.25 0.10 -0.025 (-0.25-0.0575)^2*0.10 = 0.00945 B -0.15 0.20 -0.03 (-0.15-0.0575)^2*0.20 = 0.00861 C 0 0.15 0 (0-0.0575)^2*0.15 = 0.000496 D 0.15 0.25 0.0375 (0.15-0.0575)^2*0.25 = 0.00214 E 0.25 0.30 0.075 (0.25-0.575)^2*0.30 = 0.01112 Expected Return 0.0575 Variance = 0.0318 Standard = (0.0318)^0.5 = 0.178

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