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Consider the following probability distribution for stocks A and B: State Probability Return on Stock A % Return on Stock B % 1 0.10 10
Consider the following probability distribution for stocks A and B:
State | Probability | Return on Stock A % | Return on Stock B % |
1 | 0.10 | 10 | 8 |
2 | 0.20 | 13 | 7 |
3 | 0.20 | 12 | 6 |
4 | 0.30 | 14 | 9 |
5 | 0.20 | 15 | 8 |
The expected rates of return of stocks A and B are --- and ---, respectively.
a.
13.2%; 9%
b.
14%; 10%
c.
10%; 8%.
d.
13.2%; 7.7%
e.
7.7%; 13.2%
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