2 MBA5903 OCTOBER/NOVEMBER 2017 Question 1 [12 Marks] Stocks X and Y have the following probability distrbutions of expected future returns Y Probability % % 0 1 -10% -35% 02 2 0 04 12 20 02 20 25 01 38 45 Required: Calculate the expected rate of return, ry, for Stock Y (the expected rate of return for Stock X, [x = 12%) 12 Calculate the standard deviation of expected returns, for Stock X (standard deviation for Stock Y = 20 35%) Now calculate the coefficient of variation for Stock Y 13 Under which circumstances would most investors regard Stock Y as being less risky than Stock X, given the information above? edias