What is risk? How Covariance or correlation helps to reduce portfolio risk? Security X and Y have the following probability distributions of expected future returns: I. II. III. IV. Probability 0.30 0.50 0.20 Stock X -09 % 11 18 Calculate the expected rate of return for each stock. Calculate the standard deviation of returns for each stock. Stock Y 22% -7.5 16 Calculate the coefficient of variation for each stock and recommend which one you select if you take only one project. Assume that someone held a portfolio consisting of 45 percent of stock X and 55 percent of stock Y and the correlation between stock X and Y is -0.721. Calculate the expected rate of return and standard deviation for this portfolio.