1. A stock has a 20% probability of losing 10% next year, a 30% chance of earning 6%, a 30% chance of earning 16% and a 20% chance of earning 42%. Given that probability distribution for the stock what is the stock’s standard deviation? A. 18.89% B. 17.07% C. 3.57% D. 2.91%
2. Stock A has an expected return of 13% with a standard deviation of 18%. Stock B has an expected return of 11% and a standard deviation of 18%. Which of the stocks would be preferred by every risk-averse investor? A. Stock A B. Stock B C. Neither