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Problem 8-07 You are considering two stocks and have determined the following information: Stock A Return 22% 14 Probability of the Return 45% 10 45
Problem 8-07 You are considering two stocks and have determined the following information: Stock A Return 22% 14 Probability of the Return 45% 10 45 Stock B Return 30% Probability of the Return 20% 14 60 a. Which of the two stocks has the higher expected return? Round your answers to two decimal places. The return on Stock A: The return on Stock B: -Select- has the higher expected return. b. Which stock is riskier? Do not round intermediate calculations. Round your answers to two decimal places. Standard deviation of Stock A: Standard deviation of Stock B: -Select- is riskier. c. Given your answers to the two previous questions, what stock is preferred? -Select- is preferred
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