::: vuaskari.com ::: MGT 411 IDEA SOLUTION BY BINISH

MGT411 idea solution

 dont copy solve it by urself 

 

 

Question no 1:

 

Period holding Stock return =D next year/ P today  +P next year – P today /P today

=150/1000+998-1000/1000

=0.15+ (-2)/1000*100 -à as we have to derive ans in percentage

=14.8%

 

Question No 2

Variance calculations:

 

Compute the expected values:

900*1/2+1200*1/2=1000

450 +600=1050

 

Subtract from each of the provided pay off :

900-1050=-150

1200-1050=150

 

Square each of the result:

(-150)2=22500

(150)2=22500

 

Multiply each result time with its probability and adds up

 

=1/2*22500+1/2*22500

=11250+11250

=22500

 

 

 B Part:

Standard deviation is just take square root of each case result

= square root of  (22500) -à first case

=150

=square root of (22500)à second case

= same 150 is ans

Question NO 3

Risk premium = Offered annual return – Return provided by Treasury bills

Risk premium=16-7

Risk Premium=9

 

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