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Stocks A and B have the following probability distributions of expected future returns: (21%) 0 Probability 0.1 0.2 0.5 0.1 0.1 (10%) 3 15 18

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Stocks A and B have the following probability distributions of expected future returns: (21%) 0 Probability 0.1 0.2 0.5 0.1 0.1 (10%) 3 15 18 33 22 30 44 a. Calculate the expected rate of return, B. for Stock B (A - 12.20%.) Do not round intermediate calculations. Round your answer to two decimal places. b. Calculate the standard deviation of expected returns, or for Stock A (0817,44%.) 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. II. 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. 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 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. 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- C. Assume the risk-free rate is 1.5%. 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: Are these calculations consistent with the information obtained from the coefficient of variation calculations in Part b

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