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Stocks A and B have the following probability distributions of expected future returns: Probability A B 0 . 1 ( 1 1 % ) (
Stocks A and B have the following probability distributions of expected future returns: Probability A B Calculate the expected rate of return, for Stock B Do not round intermediate calculations. Round your answer to two decimal places. Calculate the standard deviation of expected returns, sigma A for Stock A sigma B 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 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. 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. 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. 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. 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. Select Assume the riskfree rate is 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 In a standalone 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. In a standalone 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. In a standalone 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 lower beta than Stock A and hence be less risky in a portfolio sense. In a standalone 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. In a standalone 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. Select
Stocks A and B have the following probability distributions of expected future returns:
Probability A B
Calculate the expected rate of return, for Stock B Do not round intermediate calculations. Round your answer to two decimal places.
Calculate the standard deviation of expected returns, sigma A for Stock A sigma B 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
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.
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.
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.
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.
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.
Select
Assume the riskfree rate is 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
In a standalone 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.
In a standalone 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.
In a standalone 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 lower beta than Stock A and hence be less risky in a portfolio sense.
In a standalone 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.
In a standalone 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.
Select
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