Stocks Y and Z have the following probability distributions of expected future returns:

1. Calculate the expected returns for Stocks Y and Z.

2. Calculate the standard deviations of expected returns for Stocks Y and Z.

3. Calculate the coefficients of variation for Stocks Y and Z.

4. Which of these two stocks is the preferred investment, based upon both risk and return? Explain why you made the choice you did, by interpreting your data.

Probability 0.1 0.2 0.4 0.2 0.1 Expected Returns Y z (9%) (30%) 3% 1% 11% 21% 20% 26% 35% |_ 42%