1. Summerville Inc. is considering an investment in one of two common stocks. Given the information:

COMMON STOCK A		COMMON STOCK B
PROBABILITY	RETURN	PROBABILITY	RETURN
0.2	12%	0.2	-4%
0.6	14%	0.3	5%
0.2	20%	0.3	14%
		0.2	21%

which investment is better, based on the risk (as measured by the standard deviation) and return of each?

A1. The expected rate of return for Stock A is ______% (round to 2 decimal places and assume %)

A2. The expected rate of return for Stock B is ______% (Round to two decimal places and assume %)

B1. The standard deviation for Stock A is___ % (Round to two decimal places and assume %)

B2. The standard deviation for Stock B is ____% (Round to two decimal places and assume %)

C. Based on the risk (as measured by the standard deviation) and return of each stock, which investment is better? (Select the best choice below.)

1.Stock A is better because it has a higher expected rate of return with less risk.

2.Stock B is better because it has a lower expected rate of return with more risk.