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Stocks A and B have the following probability distributions of expected future returns: a . Calculate the expected rate of return, hat ( r )
Stocks A and B have the following probability distributions of expected future returns:
a Calculate the expected rate of return, hat for Stock Do not round intermediate calculations. Round your answer to two decimal places.
b Calculate the standard deviation of expected returns, for Stock Do not round intermediate calculations. Round your answer to two decimal places.
c 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
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