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You have estimated the following probability distributions of expected future returns for Stocks X and Y: (Please show calculations using excel) Stock X Stock Y

You have estimated the following probability distributions of expected future returns for Stocks X and Y: (Please show calculations using excel)

Stock X Stock Y
Probability Return Probability Return
0.1 -10 % 0.2 4 %
0.3 12 0.2 6
0.3 14 0.2 12
0.2 30 0.2 18
0.1 45 0.2 30

What is the expected rate of return for Stock X? Stock Y? Round your answers to one decimal place.

Stock X

Stock Y

What is the standard deviation of expected returns for Stock X? For Stock Y? Round your answers to two decimal places.

Stock X %

Stock Y %

  1. Which stock would you consider to be riskier?

_____ is riskier because it has a _____ standard deviation of return

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