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Consider the following two companies and their forecasted returns for the upcoming year: Company A Company B Outcome 1 Probability 50% 25% Return 5% 7.5%
Consider the following two companies and their forecasted returns for the upcoming year:
| Company A | Company B | ||
| Outcome 1 | Probability | 50% | 25% |
| Return | 5% | 7.5% | |
| Outcome 2 | Probability | - | 25% |
| Return | - | 2.5% |
- What is the standard deviation of the returns on each company's stock (Company A, and B) (write all formulas)
2. Of these two stocks, which is riskier? Justify your answer
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