1. Statistical measures of standalone risk Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible oroumstances, To compute an asset's expected retum under a range of possible circumstances (or states of nature), multiply the antiopated return expected to result during each state of nature by its probabality of ocaurrence. Consider the following case: Joshua cwns a two-stock portfolio that irvests in Happy Dog Soap Company (HDS) and Black Sheep Broadcasting (BSB). Three-quarters of loshua's portfolio value consists of HDS's shares, and the balance consists of BSB's shares. Each stock's expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detalled in the following table: Cwaulate expected retums for the indivifual socks in loshaa's portfolo as well as the expected rate of return of the entre portfolio over the three possible maket condions nex year. - The expected rate of return on Happy Dog Soap's stock over the next year is - The expected rate of return on Black Sheep Brondcasting's stock over the next year is - The expected rate of return on Jochuas portfolio over the next year is The expected retums for loshuar portfolio were calculated based on three possibie conditions in the market. Such conditions will vary from time to tume, and for each condition there will be a specific outcome. These probabilities and autoomes cin be represented in the form of a cantinusus probability distnitution graph. For example, the contimaxus probabity distritutions of rates of retum on stoaks for two differen cornpaners are showr on the following oraphir For example, the continuous probability distributions of rates of return on stocks for two different comparies are shown on the following graph: Based on the graphis information, which statement is false? Compaery H has lower risk. Comparty G has lower risk