Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

pls stepwise and in excel only pls, explain concept also Expected returns Stocks A and B have the following probability distributions of expected future returns:

pls stepwise and in excel only pls, explain concept also

image text in transcribed

Expected returns Stocks A and B have the following probability distributions of expected future returns: a. Calculate the expected rate of return, rB, for Stock B(rA=12.80%.) Do not round intermediate calculations. Round your answer to two decimal places. \% b. Calculate the standard deviation of expected returns, A, for Stock A(B=22.86%.) Do not round intermediate calculations. Round your answer to two decimal \% c. Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places. d. Is it possible that most investors might regard Stock B as being less risky than Stock A? I. 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. II. 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. III. 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. IV. 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. V. 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The ACT Guide To Ethical Conflicts In Finance

Authors: Andreas Prindl, Bimal Prodhan

1st Edition

1855732564, 978-1855732568

More Books

Students also viewed these Finance questions

Question

=+43-3 Discuss how stress makes us more vulnerable to disease.

Answered: 1 week ago