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Stocks A and B have the following probability distributions of expected future returns: Probability B 0.1 (12%) (27%) 0.2 4 0 0.4 14 20 0.2
Stocks A and B have the following probability distributions of expected future returns: Probability B 0.1 (12%) (27%) 0.2 4 0 0.4 14 20 0.2 19 25 0.1 30 35 a. Calculate the expected rate of return, fb, for Stock B (A = 12.00%.) Do not round intermediate calculations. Round your answer to two decimal places. % = 17.03%.) Do not round intermediate calculations. Round your answer to two b. Calculate the standard deviation of expected returns, OA, for Stock A (OB decimal places. % Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places. C. Assume the risk-free rate is 3.5%. 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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