Find the expected return for both stocks based on risk and, Financial Management

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Find the expected return for both stocks based on risk and

You are considering an investment in one of two common stocks. The standard deviation of returns for assets A & B respectively are 1.73% and 5.49%.

Common Stock A Common Stock B

Probability Return Probability Return

.10 15.0% .20 4.0%

.20 11.5% .45 11.0%

.40 10.0% .10 25.0%

.30 9.0% .25 9.0%

1) Find the expected return for both stocks.

2) Based on risk and return, which investment is better? Explain why you made this choice.

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Financial Management: Find the expected return for both stocks based on risk and

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Financial Management: Find the expected return for both stocks based on risk and

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