Stocks X and Y have the following probability distributions of expected future returns: Probability X Y0.1 (4%) (20%)0.2 4 10.4 12 200.2 20 250.1 36 40A.Calculate the expected rate of return for stocks A and B. Calculate thes %standard deviations of expected returns and coefficient of variations for stocks A and B. Is it possible that most investors might regard stock Y as being less risky than stock A? Explain

Stocks X and Y have the following probability distributions of expected future returns:

Calculate the expected rate of return, rY, for Stock Y (rX = 12.00%.) Round your answer to two decimal places.
%

Calculate the standard deviation of expected returns, σX, for Stock X (σY = 18.21%.) Round your answer to two decimal places.
%

Now calculate the coefficient of variation for Stock Y. Round your answer to two decimal places.

Is it possible that most investors might regard Stock Y as being less risky than Stock X?

A. If Stock Y is less highly correlated with the market than X, then it might have a lower beta than Stock X, and hence be less risky in a portfolio sense.

B. If Stock Y is less highly correlated with the market than X, then it might have a higher beta than Stock X, and hence be more risky in a portfolio sense.

C. If Stock Y is more highly correlated with the market than X, then it might have a higher beta than Stock X, and hence be less risky in a portfolio sense.

D. If Stock Y is more highly correlated with the market than X, then it might have a lower beta than Stock X, and hence be less risky in a portfolio sense.

E. If Stock Y is more highly correlated with the market than X, then it might have the same beta as Stock X, and hence be just as risky in a portfolio sense.

"Q1) There is a 31.60% probability of a below average economy and a 68.40% probability of an average economy. If there is a below average economy stocks A and B will have returns of -9.50% and 11.20%, respectively. If there is an average economy stocks A and B will have returns of 5.30% and -5.40%, respectively. Compute the:

a) Expected Return for Stock A:

An investor holds a portfolio of stocks and is considering investing in the XYZ Company. The firm's prospects look neutral and you estimate the following probability distribution of possible returns:

How much is the expected return for XYZ? How much is the coefficient of variation for XYZ? 99.73% of the time in what range (what specific values) would you expect the returns for XYZ, using Empirical Rule. You add ABC to your portfolio; you sell 30% of XYZ to ABC. How much is your expected return for this portfolio? How much is the coefficient of variation for the new portfolio? Do you consider this portfolio more or less risky than the individual stocks? Why?