Stocks X and Y have the following probability distributions of expected future r
ID: 2661260 • Letter: S
Question
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 = 12.60%.) Round your answer to two decimal places.
b.) Calculate the standard deviation of expected returns, ?X, for Stock X (?Y = 19.83%.) Round your answer to two decimal places.
c.) Now calculate the coefficient of variation for Stock Y. Round your answer to two decimal places.
Probability X Y 0.1 -10% -25% 0.3 6 0 0.3 13 24 0.2 21 29 0.1 37 47Explanation / Answer
exp return = -.25*.1+0+24*.3+29*.2+47*.1 = 17.675%