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Stocks A and B have the following probability distributions of expected future returns: a. Calculate the expected rate of return, rB, for 5 tock B(r^A=14.80%.)

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Stocks A and B have the following probability distributions of expected future returns: a. Calculate the expected rate of return, rB, for 5 tock B(r^A=14.80%.) Do not round intermediate calculations. Round your answer to two decimal places. b. Calculate the standard deviation of expected returns, A, for 5 tock A(n=19.20%.) 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 5 tock B as being less risky than 5 tock 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 portfollo sense. 11. If Stock B is less highly correlated with the market than A, then it might have a lower beta than 5 tock A, and hence be less risky in a portfolio sense. 111. 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 portfollo 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 portfollo 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. c. Assume the risk-free rate is 2.5%. What are the Sharpe ratios for Stocks A and B ? Do not round intermedlate calculations. Round your answers to four decimal places. Stock A: stock 8: 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 lower beta than Stock A, and hence be less risky in a portfolio sense. II. In a stand-alpne 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 5 tock A, and hence be more risky in a portfolio sense. III. 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. IV. 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. V. 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

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