0.1 0.2 0.4 0.2 0.1
Firm A: ROEA 0.00% 5% 10% 15% 20%
Firm B: ROEB -2% 5% 12% 19% 26%
Firm C: ROEC -5% 5% 15% 25% 35%
a. Calculate the expected value and standard deviation for Firm C’s ROE. ROEA = 10.0%, A 5.5%; ROEB 12.0%, B 7.7%.
b. Discuss the relative riskiness of the three firms’ returns. (Assume that these distributions are expected to remain constant over time.)
"c. Now suppose all three firms have the same standard deviation of basic earning
power (EBIT/Total assets), A B C 5.5%. What can we tell about
the financial risk of each firm?"
Recently Asked Questions
- 7. Scott Corp. issued a 25 year bond with par value of $1,000 and coupon rate of 9% on July 1,1990. The bond was sold at 98 on July 1, 1990, and interest was
- What price do farmers get for their watermelon crops? In the third week of July, a random sample of 42 farming regions gave a sample mean ofx = $6.88 per 100
- Hello! Please could you show me how to rearrange for x2? 0.5ln36 = 0.5lnx1 + 0.5lnx2 I would really appreciate if I could see all your steps!