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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
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Row number Your Roster number is on the attendance sheet next to your name and posted on
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E 8-1 11/12/2016 Prof. Hessel A
5
10
-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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