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a. You are considering the following three securities listed below. Returns Probability Stock A Stock B Stock C 20% 2% -3% 5% 50% 10% 8%

a. You are considering the following three securities listed below.

Returns

Probability

Stock A

Stock B

Stock C

20%

2%

-3%

5%

50%

10%

8%

8%

30%

15%

20%

12%

Required:

i. Calculate the expected return for each security.

ii. Calculate the standard deviation of returns for each security.

iii. Compare Stock A with Stocks B and C. Is Stock A preferred over the others?

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