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You are considering the three securities listed below. Returns Probability Stock X Stock Y Stock Z 20% 4% -2% 5% 50% 12% 9% 8% 30%
You are considering the three securities listed below. Returns Probability Stock X Stock Y Stock Z 20% 4% -2% 5% 50% 12% 9% 8% 30% 17% 21% 12% a) Calculate the expected return (mean) for each security. b) Calculate the standard deviation of returns (risk) for each security. c) As an investor, compare Stock X with Stock Y, and identify which stock will you select and why. d) What is the expected return on your portfolio if you have 30% in Stock X and 70% in Stock Z?
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