« previous next »

Author Question: If the expected return is above the required return on an asset, rational investors will: A) Buy ... (Read 102 times)

bobthebuilder

  • Hero Member
  • *****
  • Posts: 567
on: Jul 10, 2018
If the expected return is above the required return on an asset, rational investors will:
 
  A) Buy the asset, which will drive the price up and cause expected return to reach the required return.
  B) Sell the asset, which will drive the price down and cause the expected return to reach the required return.
  C) Sell the asset, which will drive the price up and cause the expected return to reach the required return.
  D) Sell the asset, since price is expected to decrease.

Question 2

Stocks A, B, C, and D have returns of 10, 20, 30, and 40, respectively. What is their variance?
 
  A) 66.67
  B) 166.67
  C) 4.08
  D) 2.15


soda0602

  • Sr. Member
  • ****
  • Posts: 313
Reply #1 on: Jul 10, 2018
Answer to Question 1

A

Answer to Question 2

Answer: B
Explanation: B) Mean return = (10 + 20 + 30 + 40)/4 = 25, so
variance = (10 - 25)2 + (20 - 25)2 + (30 - 25)2 + (40 - 25)2/(4 - 1)
= 500 /3 = 166.67.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

Did you know?

GI conditions that will keep you out of the U.S. armed services include ulcers, varices, fistulas, esophagitis, gastritis, congenital abnormalities, inflammatory bowel disease, enteritis, colitis, proctitis, duodenal diverticula, malabsorption syndromes, hepatitis, cirrhosis, cysts, abscesses, pancreatitis, polyps, certain hemorrhoids, splenomegaly, hernias, recent abdominal surgery, GI bypass or stomach stapling, and artificial GI openings.

Did you know?

Vaccines cause herd immunity. If the majority of people in a community have been vaccinated against a disease, an unvaccinated person is less likely to get the disease since others are less likely to become sick from it and spread the disease.

Did you know?

In 1886, William Bates reported on the discovery of a substance produced by the adrenal gland that turned out to be epinephrine (adrenaline). In 1904, this drug was first artificially synthesized by Friedrich Stolz.

Did you know?

When intravenous medications are involved in adverse drug events, their harmful effects may occur more rapidly, and be more severe than errors with oral medications. This is due to the direct administration into the bloodstream.

Part A - Calculating the expected number of each phenotype Part A - Calculating the expected number of each phenotype
Which aspect of executive functioning is required to play the game of “Simon Says,” in which ... Which aspect of executive functioning is required to play the game of “Simon Says,” in which ...
A Listing of the Expected Electron Configurations for Some of the Common Elementsa A Listing of the Expected Electron Configurations for Some of the Common Elementsa
Rational design of neuraminidase inhibitors Rational design of neuraminidase inhibitors
Expected Distribution of IQ Scores Expected Distribution of IQ Scores
How much heat energy in Joules is required to heat 16.0 g of copper from 23.0 °C How much heat energy in Joules is required to heat 16.0 g of copper from 23.0 °C
Video: Introduction to Insulin

For a complete list of videos, visit our video library