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Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (12 %) (34 %) 0.2 4 0 0.5

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

Probability A B
0.1 (12 %) (34 %)
0.2 4 0
0.5 10 18
0.1 20 27
0.1 34 36
  1. Calculate the expected rate of return, , for Stock B ( = 10.00%.) Do not round intermediate calculations. Round your answer to two decimal places.

    %

  2. Calculate the standard deviation of expected returns, A, for Stock A (B = 18.40%.) Do not round intermediate calculations. Round your answer to two decimal places.

    %

    Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places.

  3. Assume the risk-free rate is 2.5%. 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:

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