Calculate expected rate of returStock B ) Do not found intermediate calculations. Round your answer to two decimal places

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number 1 section A,B,C

x Module 5 Homework Stocks A and B have the following probability distributions of expected future returns: 6 A B Probability 0.1 0.2 0.5 0.1 0.1 3 14 21 36 (289) 0 22 26 39 N a. Calculate the expected rate of return, Po, for Stock B (A - 12.20%.) Do not round intermediate calculations, Round your answer to two decimal places b. Calculate the standard deviation of expected returns, GA, for Stock A (03 - 18.00%.) Do not round intermediate calculations. Round your answer to two decimal places ni 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 B as being less risky than Stock A? 1. If Stock is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense It. If Stock is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense III. If Stock B is more highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be less risky in a portfolio sense IV. If Stock B is more highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense V. If Stock is more highly correlated with the market than A, then it might have the same betaas Stock A, and hence be just as risky in a portfolio sense . X Module 5 Homework portfolosense V. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense Relocate C. Assume the risk-free rate is 2.5%What are the Sharpe ratios for Stocks A and B? Do not round Intermediate calculations, Round your answers to four decimal places Stock A Company letter 12 Stock Are these calculations consistent with the information obtained from the coefficient of variation calculations in Part b? 1. In a stand-alone risk sense is more risky than 3. If Stock B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense. II. In a stand-alone risk sense A is less risky than 3. If Stock B is more highly correlated with the market than A, then it might have the same beta s Stock And hence be just as risky in a portfolio sense III. In a stand-alone risk sense Alles risky than B. 1 Stock is less Nghy correlated with the market than then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense IV. In a stand-alone risk sense is less risky than Bl. I Stock B is less highly correlated with the market than A, then it might have a higher beta than stock and hence be more risky in a portfolio sense V. In a stand-alone risk ene is more risky than . 1 Stock is less highly correlated with the market than then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense Grade it Now Save & Continue x Module 5 Homework Stocks A and B have the following probability distributions of expected future returns: 6 A B Probability 0.1 0.2 0.5 0.1 0.1 3 14 21 36 (289) 0 22 26 39 N a. Calculate the expected rate of return, Po, for Stock B (A - 12.20%.) Do not round intermediate calculations, Round your answer to two decimal places b. Calculate the standard deviation of expected returns, GA, for Stock A (03 - 18.00%.) Do not round intermediate calculations. Round your answer to two decimal places ni 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 B as being less risky than Stock A? 1. If Stock is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense It. If Stock is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense III. If Stock B is more highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be less risky in a portfolio sense IV. If Stock B is more highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense V. If Stock is more highly correlated with the market than A, then it might have the same betaas Stock A, and hence be just as risky in a portfolio sense . X Module 5 Homework portfolosense V. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense Relocate C. Assume the risk-free rate is 2.5%What are the Sharpe ratios for Stocks A and B? Do not round Intermediate calculations, Round your answers to four decimal places Stock A Company letter 12 Stock Are these calculations consistent with the information obtained from the coefficient of variation calculations in Part b? 1. In a stand-alone risk sense is more risky than 3. If Stock B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense. II. In a stand-alone risk sense A is less risky than 3. If Stock B is more highly correlated with the market than A, then it might have the same beta s Stock And hence be just as risky in a portfolio sense III. In a stand-alone risk sense Alles risky than B. 1 Stock is less Nghy correlated with the market than then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense IV. In a stand-alone risk sense is less risky than Bl. I Stock B is less highly correlated with the market than A, then it might have a higher beta than stock and hence be more risky in a portfolio sense V. In a stand-alone risk ene is more risky than . 1 Stock is less highly correlated with the market than then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense Grade it Now Save & Continue