Question: Stocks A and B have the following probability distributions of expected future returns:
|
Probability
|
A
|
B
|
|
0.2
|
-15%
|
-27%
|
|
0.2
|
2
|
0
|
|
0.3
|
11
|
20
|
|
0.2
|
21
|
26
|
|
0.1
|
30
|
39
|
Calculate the expected rate of return, rB, for Stock B (rA = 7.90%.) Do not round intermediate calculations. Round your answer to two decimal places.
Calculate the standard deviation of expected returns, sA, for Stock A (sB = 21.42%.) Do not round intermediate calculations. Round your answer to two decimal places.
Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places.