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Problem 8-6 Expected returns Stocks X and Y have the following probability distributions of expected future returns: Probability X Y 0.2 -6% -20% 0.2 4
Problem 8-6 Expected returns
Stocks X and Y have the following probability distributions of expected future returns:
Probability | X | Y |
0.2 | -6% | -20% |
0.2 | 4 | 0 |
0.3 | 13 | 21 |
0.2 | 19 | 27 |
0.1 | 39 | 42 |
- Calculate the expected rate of return, rY, for Stock Y (rX= 11.20%.) Round your answer to two decimal places.%
- Calculate the standard deviation of expected returns, X, for Stock X (Y= 19.82%.) Round your answer to two decimal places.%
- Now calculate the coefficient of variation for Stock Y. Round your answer to two decimal places.
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