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Consider the following two companies and their forecasted returns for the upcoming year: Company A Company B Outcome 1 Probability 100% 15% Return 3% 7.5%

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Consider the following two companies and their forecasted returns for the upcoming year: Company A Company B Outcome 1 Probability 100% 15% Return 3% 7.5% Outcome 2 Probability Return 85% 2.5% Questions: 1- What is the standard deviation of the returns on each company's stock (Company A, and B) (write all formulas) (5 Marks) 2. Of these two stocks, which is riskier? Explain why. (2 marks)

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