Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: Coefficient of variation: Sharpe ratio:

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 1P
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A stock's returns have the following distribution:
Demand for the
Probability of This
Rate of Return If
Company's Products
Demand Occurring
This Demand Occurs
Weak
0.1
(40%)
Below average
0.1
(10)
Average
0.4
16
Above average
0.3
39
Strong
0.1
56
1.0
Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations.
Round your answers to two decimal places.
Stock's expected return:
%
Standard deviation:
Coefficient of variation:
Sharpe ratio:
Transcribed Image Text:A stock's returns have the following distribution: Demand for the Probability of This Rate of Return If Company's Products Demand Occurring This Demand Occurs Weak 0.1 (40%) Below average 0.1 (10) Average 0.4 16 Above average 0.3 39 Strong 0.1 56 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Stock's expected return: % Standard deviation: Coefficient of variation: Sharpe ratio:
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