Stocks A and B have the following probability distributions of expected future returns: Probability 0.1 0.2 0.4 24 0.2 26 0.1 46 a. Calculate the expected rate of return, Fa, for Stock B (FA-13.30%.) Do not round intermediate calculations. Round your answer to two decimal places. A (11%) 3 15 23 32 (27%) D Calculate the standard deviation of expected returns, DA, for Stock A (on 19.27%.) 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. Is it possible that most investors might regard Stock B as being less risky than Stock A? 1. 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 St 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. III. 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. IV. If Stock 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. V. 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. Select 1 berd c. Assume the risk-free rate is 3.5%. What are the Sharpe ratios for Stocks A and 8? Do not round intermediate calculations. Round your answers to four decimal places. Stock A Stock B Are these calculations consistent with the information obtained from the coefficient of variation calculations in Part b? 1. In a stand-alone risk sense A is less risky than B. 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. 11. In a stand-alone risk sense A is more risky than B. 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 111. In a stand-alone risk sense A is more risky than B. 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. TV. In a stand-alone risk sense A is less risky than B. 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 V. In a stand-alone risk sense A is less risky than 8. 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 Seed