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The following probability distributions of returns for two stocks have been estimated: Probability Stock X Stock Y 0.25 3% 6% 0.35 8% 3% 0.40 6%

The following probability distributions of returns for two stocks have been estimated:

Probability Stock X Stock Y

0.25 3% 6%

0.35 8% 3%

0.40 6% 1%

What is the coefficient of variation for the stock that is more risky relative to its return (use the coefficient of variation to rank) and explain why?

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