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hello, I have to turn this in by midnight est so any help is appreciated. 

Prof. Hessel

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hello, I have to turn this in by midnight est so any help is appreciated. 

Prof. Hessel Fin 3000

 

Topic 8 Risk and Return Fall 2016 Homework Answer Page to be submitted.

 

DUE Date announced in class

 

Your Name

 

Room Location: clock, no clock or center

 

Circle the location Roster number

 

Row number Your Roster number is on the attendance sheet next to your name and posted on

 

blackboard. Please color in your answer using a color highlighter.

 

To change your answer put and ?x? over the wrong answer and right the correct letter next to

 

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E 8-1 11/12/2016 Prof. Hessel A

 

5

 

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-3 Fin 3000

 

Topic 8 Risk and Return

 

B

 

15

 

5

 

-5 Fall 2016 index

 

8

 

3

 

-2 1. How much is the expected profits of Stock A a)$3 b)$4 c)$5 d)$6

 

2. How much is the expected profits of the S&P Index a)$3 b)$4 c)$5 d)$6 3. How much is the standard deviation for Stock A? a)6.56 b)10 c)5 d)100 4. How much is the standard deviation for Stock B? a)6.56 b)10 c)5 d)100 5. How much is the covariance between stock A and the S&P Index? a) 7.33 b) 100

 

c)20 d) 50 6. How much is the covariance between stock B and the S&P Index? a) 7.33 b) 100

 

c)20 d) 50 7. How much is the lower limit of stock B ? a)-6.82 b)-11.5 c)-5.25 8. How much is the lower limit of the index? a)-6.82 b)-11.5 c)-5.25 9. How much is the correlation between stock A and the S&P Index? a) 25%

 

b) 61% c) 100% d) -47% 10. How much is the correlation between stock B and the S&P Index? ? a) 25%

 

b) 61% c) 100% d) -47% 11. How much is Stock A?s beta? a)0.80 b)1.00 c)1.30 d)2.00 12. How much is Stock B?s beta? a)0.80 b)1.00 c)1.30 d)2.00 13. Total risk of a stock is measured by the stock?s a)beta b)correlation c)standard

 

deviation d)return

 

14. The risk measure in the Security Market Line equation is a)beta b)correlation

 

c)standard deviation d)return

 

15. Standard deviation is an estimate of a)total risk b)unsystematic risk c)systematic risk

 

d)the difference between the systematic and unsystematic risk

 

16. Beta is an estimate of a)total risk b)unsystematic risk c)systematic risk d)the

 

difference between the systematic and unsystematic risk 8-2 11/12/2016 Prof. Hessel Fin 3000

 

Topic 8 Risk and Return Fall 2016 17.

 

If the returns of two stocks vary over time, the amount that they vary in common

 

is measured by their a)standard deviation b)covariance c)expected return d)betas

 

Use the information below to answer the next three questions

 

Security

 

Ford

 

GM

 

Index S&P 500

 

Ford with the S&P

 

GM with the S&P

 

Ford with GM Standard deviation

 

25

 

35

 

30

 

Covariance

 

600

 

612.50

 

845 Variance

 

625

 

1,225

 

900 18. Use the information above to calculate the correlation between Ford and GM a) 58%

 

b ) 72% c) 80% d) 97%

 

19. Use the information above to calculate the correlation between Ford and index a)

 

58% b ) 72% c) 80% d) 97%

 

20. Use the information above to calculate the correlation between GM and index

 

a) 58% b ) 72% c) 80% d) 97% 8-3 11/12/2016

 

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