2. Problem 8.06 (Expected Returns) Stocks A and s have the following probability distributions of expected future retums: a. Calculate the expected rate of return, FB, for stock B ( F=13.90%.) D0 not round intermediate calculations, Round your answer to two dedimal places. b. Calculate the standord deviation of expected returns, ON for Stock A (ob = 20.974.) Do not round intermediate caiculations. Round your answer to two decimal places. Now calculate the coefficent of varistion for Stoek B. De not reund intermenfate caleulotions, found your answer to two decimal places. Is it poss ble that most investors might regard Stock B as being less risky than Stock A? T. If Stock B is more highly correlated wath the market than A, then it might have a higher beta than Stock A, and hence be less risky in a portfolo sense. II. If Stock B is more highly correlated with the market than A, then it might have a lewer beta than Steck A, and hence be less riaky in a portfolio serse. 111. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a pertfolio sense. N. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, aod hence be less risky in a portfolio sense. V. If Stock B is lecs highly correlated with the market than A, then it might have a hagher beta than stock A, and hence be more risky in a portfolio sense. C. Assume the risk-tree rate is 2.5%. What are the 5 harpe ratios for 5 tocks A and 8 ? Do not round intermediate calculations. Round your answers to four decimal places. Stock A: Stock B : Are these calculations consistent with the information obtained from the coeticient of variation calculations in Part b? 1. In a stand-aione risk sense A is less risky than B. If Stock B is iess highly correloted with the market than A, then it might have a higher beta than Steck A, and hence be more risky in a pertfolis sense. 11. In a stand-alone risk sense A is more risky than B. If Stock B is less mighly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. III. In a stand-alone risk sense A is more nisky than B. If Steck B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risiky in a portfolio sense. IV. In a stand-aione risk sense A is less risky than B, It Stock B is mare highly carrelated with the market than A, then it might have the same beta as Stock A, and hence be just as insky in a portfolio sense. V. In a stand-alone risk sense A is less risky than B. If Stock B is inss highly correlsted with the market than A, then it might have a lower. beta than 5 tock A, and. hence be less risky in a portiolio sense. 2. Problem 8.06 (Expected Returns) Stocks A and s have the following probability distributions of expected future retums: a. Calculate the expected rate of return, FB, for stock B ( F=13.90%.) D0 not round intermediate calculations, Round your answer to two dedimal places. b. Calculate the standord deviation of expected returns, ON for Stock A (ob = 20.974.) Do not round intermediate caiculations. Round your answer to two decimal places. Now calculate the coefficent of varistion for Stoek B. De not reund intermenfate caleulotions, found your answer to two decimal places. Is it poss ble that most investors might regard Stock B as being less risky than Stock A? T. If Stock B is more highly correlated wath the market than A, then it might have a higher beta than Stock A, and hence be less risky in a portfolo sense. II. If Stock B is more highly correlated with the market than A, then it might have a lewer beta than Steck A, and hence be less riaky in a portfolio serse. 111. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a pertfolio sense. N. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, aod hence be less risky in a portfolio sense. V. If Stock B is lecs highly correlated with the market than A, then it might have a hagher beta than stock A, and hence be more risky in a portfolio sense. C. Assume the risk-tree rate is 2.5%. What are the 5 harpe ratios for 5 tocks A and 8 ? Do not round intermediate calculations. Round your answers to four decimal places. Stock A: Stock B : Are these calculations consistent with the information obtained from the coeticient of variation calculations in Part b? 1. In a stand-aione risk sense A is less risky than B. If Stock B is iess highly correloted with the market than A, then it might have a higher beta than Steck A, and hence be more risky in a pertfolis sense. 11. In a stand-alone risk sense A is more risky than B. If Stock B is less mighly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. III. In a stand-alone risk sense A is more nisky than B. If Steck B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risiky in a portfolio sense. IV. In a stand-aione risk sense A is less risky than B, It Stock B is mare highly carrelated with the market than A, then it might have the same beta as Stock A, and hence be just as insky in a portfolio sense. V. In a stand-alone risk sense A is less risky than B. If Stock B is inss highly correlsted with the market than A, then it might have a lower. beta than 5 tock A, and. hence be less risky in a portiolio sense