EXPECTED RETURNS Stocks X and Y have the following probability distributions of expected future returns:
a. Calculate the expected rate of return, rY, for Stock Y rX = 12% .
b. Calculate the standard deviation of expected returns sX, for Stock X(sY 20 35%) .
Now calculate the coefficient of variation for Stock Y. Is it possible that most investors will regard Stock Y as being less risky than Stock X? Explain.