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Calculate the expected rate of return for each stock. (2 decimal) places Stock A Expected Return % Stock B Expected Return % Calculate the standard deviation of expected returns, for each stock (2 decimal places)

Calculate the expected rate of return for each stock. (2 decimal) places Stock A Expected Return % Stock B Expected Return % Calculate the standard deviation of expected returns, for each stock (2 decimal places)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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### Probability Distributions of Expected Future Returns for Stocks A and B #### Returns for Stocks A and B | Probability | Stock A (%) | Stock B (%) | |-------------|-------------|-------------| | 0.1 | -10 | -35 | | 0.2 | 2 | 0 | | 0.4 | 12 | 20 | | 0.2 | 20 | 25 | | 0.1 | 38 | 45 | ### Tasks 1. **Calculate the Expected Rate of Return for Each Stock** (2 decimal places) - **Stock A Expected Return**: _____ % - **Stock B Expected Return**: _____ % 2. **Calculate the Standard Deviation of Expected Returns for Each Stock** (2 decimal places) - **Stock A Standard Deviation**: _____ % - **Stock B Standard Deviation**: _____ % 3. **Calculate the Coefficient of Variation for Each Stock** (2 decimal places) - **Stock A Coefficient of Variation**: _____ - **Stock B Coefficient of Variation**: _____ 4. **Calculate the Sharpe Ratios for Stocks A and B** (Assume the risk-free rate is 2.5%) (4 decimal places) - **Stock A Sharpe Ratio**: _____ - **Stock B Sharpe Ratio**: _____
Transcribed Image Text:### Probability Distributions of Expected Future Returns for Stocks A and B #### Returns for Stocks A and B | Probability | Stock A (%) | Stock B (%) | |-------------|-------------|-------------| | 0.1 | -10 | -35 | | 0.2 | 2 | 0 | | 0.4 | 12 | 20 | | 0.2 | 20 | 25 | | 0.1 | 38 | 45 | ### Tasks 1. **Calculate the Expected Rate of Return for Each Stock** (2 decimal places) - **Stock A Expected Return**: _____ % - **Stock B Expected Return**: _____ % 2. **Calculate the Standard Deviation of Expected Returns for Each Stock** (2 decimal places) - **Stock A Standard Deviation**: _____ % - **Stock B Standard Deviation**: _____ % 3. **Calculate the Coefficient of Variation for Each Stock** (2 decimal places) - **Stock A Coefficient of Variation**: _____ - **Stock B Coefficient of Variation**: _____ 4. **Calculate the Sharpe Ratios for Stocks A and B** (Assume the risk-free rate is 2.5%) (4 decimal places) - **Stock A Sharpe Ratio**: _____ - **Stock B Sharpe Ratio**: _____
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