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

Probability A B

0.2 (9%) (22%)

0.2 5 0

0.3 11 20

0.2 20 30

0.1 40 36

A- Calculate the expected rate of return, rB, for Stock B (rA = 10.50%.) 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 = 20.02%.) Do not round intermediate calculations. Round your answer to two decimal places. %

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?

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.

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.

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.

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.

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.