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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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