EXPECTED RETURNS

Stocks A and B have the following probability distributions of expected future returns:

Probability A B

0.1 (5%) (21%)

0.3 4 0

0.3 12 20

0.2 21 28

0.1 28 41

Calculate the expected rate of return, rB, for Stock B (rA = 11.30%.) Do not round intermediate calculations. Round your answer to two decimal places. %

Calculate the standard deviation of expected returns, ?A, for Stock A (?B = 17.44%.) Do not round intermediate calculations. Round your answer to two decimal places. %

Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places.