A calculate the expected rate of return for each stock and

Question

Discussion Questiuon

Return and Measures of Risk. Stocks A and B has the following probability distributions of possible future returns:

Probability (pi)               A (%)          B (%)
     0.1                          15               20
     0.2                           0                10
     0.4                           5                20
     0.2                           10              30
     0.1                           25              50

(a) Calculate the expected rate of return for each stock and the standard deviation of return for each stock,
(b) Calculate the coefficient of variation,
(c) Which stock is less risky? Explain.