EXPECTED RETURN A stock's returns have the following distribution: Demand for the...
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EXPECTED RETURN
A stock's returns have the following distribution:
Demand for the Company's Products
Probability of This Demand Occurring
Rate of Return If This Demand Occurs
Weak
0.1
(38%)
Below average
0.2
(12)
Average
0.3
12
Above average
0.1
25
Strong
0.3
72
1.0
Calculate the stock's expected return. Round your answer to two decimal places. %
Calculate the stock's standard deviation. Do not round intermediate calculations. Round your answer to two decimal places. %
Calculate the stock's coefficient of variation. Round your answer to two decimal places.
EXPECTED RETURNS
Stocks A and B have the following probability distributions of expected future returns:
Probability
A
B
0.2
(12%)
(37%)
0.2
4
0
0.3
14
22
0.2
19
29
0.1
35
49
Calculate the expected rate of return, rB, for Stock B (rA = 9.90%.) Do not round intermediate calculations. Round your answer to two decimal places. %
Calculate the standard deviation of expected returns, A, for Stock A (B = 27.01%.) Do not round intermediate calculations. Round your answer to two decimal places. %
Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places.
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