1. Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 25 % 10 % 11% 2 50 % 15 % 12% 3 25 % 18 % 15% 1) What are the expected rates of return of stocks A and B. respectively?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 1P
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1. Consider the following probability distribution for stocks A
and B:
State Probability Return on Stock A Return on Stock B
1 25 % 10 % 11%
2 50 % 15 % 12%
3 25 % 18 % 15%
1) What are the expected rates of return of stocks A and B.
respectively?
Transcribed Image Text:1. Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 25 % 10 % 11% 2 50 % 15 % 12% 3 25 % 18 % 15% 1) What are the expected rates of return of stocks A and B. respectively?
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