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Probability X Y 0.1 – 10% – 35% 0.2 2 0 0.4 12 20 0.2 20 25 0.1 38 45

a) Calculate the expected rate of return, ḱy, for Stock Y (ḱx = 12%). b) Calculate the standard deviation of expected returns, σx, for Stock X (σy = 20.35%). c) Calculate the coefficient of variation for Stock Y. d) Is it possible that most investors will regard Stock Y as being less risky than Stock X? Explain

# Stocks X and Y have the following probability distributions of expected future returns:?

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- 3+ months ago by kanatilahun
- Topics:
- future, stock, distribution, return, probability

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Added 3+ months ago:

Stocks X and Y have the following probability distributions of expected future returns:

Probability X Y 0.1 – 10% – 35% 0.2 2 0 0.4 12 20 0.2 20 25 0.1 38 45

a) Calculate the expected rate of return, ḱy, for Stock Y (ḱx = 12%). b) Calculate the standard deviation of expected returns, σx, for Stock X (σy = 20.35%). c) Calculate the coefficient of variation for Stock Y. d) Is it possible that most investors will regard Stock Y as being less risky than Stock X? Explain.

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