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Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (6 %) (26 %) 0.1 4 0 0.5
Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.1 (6 %) (26 %) 0.1 4 0 0.5 11 18 0.2 18 28 0.1 33 38 a. Calculate the expected rate of return, B, for Stock B (FA = 12.20%.) Do not round intermediate calculations. Round your answer to two decimal places. % b. Calculate the standard deviation of expected returns, oa, for Stock A (OB = 16.77%.) 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. 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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