Problem 8-1 Expected return A stock\'s returns have the following distribution:
ID: 2708984 • Letter: P
Question
Problem 8-1
Expected return
A stock's returns have the following distribution:
Calculate the stock's expected return. Round your answer to two decimal places.
%
Calculate the stock's standard deviation. Round your answer to two decimal places.
%
Calculate the stock's coefficient of variation. Round your answer to two decimal places.
%
ANSWER AND EXPLAIN
Problem 8-1
Expected return
A stock's returns have the following distribution:
Demand for theCompany's Products Probability of This
Demand Occurring Rate of Return If
This Demand Occurs Weak 0.1 -26% Below average 0.2 -13 Average 0.4 17 Above average 0.2 20 Strong 0.1 45 1.0
Calculate the stock's expected return. Round your answer to two decimal places.
%
Calculate the stock's standard deviation. Round your answer to two decimal places.
%
Calculate the stock's coefficient of variation. Round your answer to two decimal places.
%
ANSWER AND EXPLAIN
Explanation / Answer
Answer:
Transaction journal entries:
a)
Debit Cash
20,000
Debit Truck (PPE)
6,000
Credit Common stock
26,000
To record initial investment by owner.
b)
Debit Rent expense
4,000
Credit Cash
4,000
To record rent paid.
c)
Debit Inventory
50,000
Credit Accounts payable
50,000
To record inventory purchased on account
d)
Debit Cash
84,500
Credit Sales
84,500
Debit Cost of goods sold
30,000
Credit Inventory
30,000
To record cash sale and cost of sale.
Debit Cash
20,000
Debit Truck (PPE)
6,000
Credit Common stock
26,000
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