II$.$ If Stock $B$ 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.

III. 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.

IV$.$ 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.

V$.$ 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.

c$.$ Assume the risk$-$free rate is $1\mathrm{.}5\%.$ What are the Sharpe ratios for Stocks A and B$?$ Do not round intermediate calculations. Round your answers to four decimal places.

Stock A:

Stock B:

Are these calculations consistent with the information obtained from the coefficient of variation calculations in Part $b?$

I. In a stand$-$alone risk sense $A$ is less risky than $B.$ 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.

II$.$ In a stand$-$alone risk sense $A$ is less risky than $B.$ If Stock $B$ 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.

III. In a stand$-$alone risk sense A is less risky than B$.$ 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.

IV$.$ In a stand$-$alone risk sense A is more risky than B$.$ If Stock B 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.

V$.$ In a stand$-$alone risk sense A is more risky than B$.$ 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.Stocks A and B have the following probability distributions of expected future returns:

a$.$ Calculate the expected rate of return, hat$(r{)}_B,$ for $.$