Author Question: When looking at the history of returns, we are taking an ex-ante review and when we are looking at ... (Read 86 times)

brutforce · **on:** Jul 10, 2018

When looking at the history of returns, we are taking an ex-ante review and when we are looking at the future of returns we are taking an ex-post view.

Indicate whether the statement is true or false.

Question 2

George is considering an investment in Parson Inc. and has gathered the information in the following table. What is the expected standard deviation for a share of the firm's stock?

State of the Economy Probability of the
State Conditional Expected Return
Parson Inc.
Recession .25 -20
Steady .60 10
Boom .15 35

A) 17.46
B) 22.48
C) 27.54
D) 31.62

coreycathey · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: FALSE
Explanation: When looking at the history of returns we are taking an ex-post review and when we are looking at the future of returns we are taking an ex-ante view.

Answer to Question 2

Answer: A
Explanation: A) Standard deviation = (rs - E(r))2 probs1/2
= (-20 - 6.25)2 .25 + (10 - 6.25)2 .60 + (35 - 6.25)2 .151/2 = 17.46.

brutforce · **Reply #2 on:** Jul 10, 2018

TY

coreycathey · **Reply #3 on:** Jul 10, 2018

Happy to Help

Author Question: When looking at the history of returns, we are taking an ex-ante review and when we are looking at ... (Read 86 times)

brutforce

When looking at the history of returns, we are taking an ex-ante review and when we are looking at ...

coreycathey

When looking at the history of returns, we are taking an ex-ante review and when we are looking at ...

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brutforce

When looking at the history of returns, we are taking an ex-ante review and when we are looking at ...

coreycathey

When looking at the history of returns, we are taking an ex-ante review and when we are looking at ...