ads A and B have the following probability distributions of expected future retums Probability 0.1 A (10%) (21%) 02 5 0.5 23 0.1 0.1 20 29 34 Calculate the expected rate of return, Fa, for Stock 8 - 11.00%) Do not round intermediate calculations: Round your answer to two decimal places Calculate the standard deviation of expected returns, ox, for Stock A (os = 17.53%) Do not round intermediate calculations. Round your answer to two decimal places Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places Is it possible that most investors might regard Stock as being less risky than Stock A portfolio sense. 1. Stack is more highly correlated with the market than A, then it might have a higher bela than Stock A, and hence be less risky in a portfolio sense 11.17 Stock is more highly correlated with the market than A, then it might have a lower beta than Stocki 11. If Stock is more highly comesated with the market than A, then it might have the same beta as Stock A VI Stock is less highly correlated with the market than A, then it might have a tower beta than Stock A, and hence b Vt Stock is less Nighty correlated with the market than A, then it might have a higher beta than Stock A, and hence portfolio sense ve risky in a portfolio sense Assume the risk-free rate is 1.5% What are the Sharpe ratios for Stocks A and B Do not round intermediate calculations Round your answers to four decimal places Stock A Stock B Are these calculations constent with the formation obtained from the coefficient of variation calculations in Part 1. In a stand-alone risk sene 11. In a stand-alone mak serie TV alone risk sen stand-alone rok sense i than w the market than A. then must have more highly correlated with the market than A, then it might have the same bela as Stock A, and hence be just as ricky in a portful sense. Tower beta than Stock A and hunce market they portfolio sense. ky in portfolio sense