4. Suppose you are willing to invest your savings. Stocks R and S have the following...
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4. Suppose you are willing to invest your savings. Stocks R and S have the following probability distributions of returns: RETURN PROBABILITY STOCK R STOCK S 0.5 -2% 20% 0.1 10 12 0.4 15 i. Calculate expected return for each stock. ii. Calculate the standard deviation of returns for each stock. Which stock is considered riskier with respect to total risk? Compute the coefficient of variation for each stock. According to the coefficient of ii. variation, which stock is considered riskier? 4. Suppose you are willing to invest your savings. Stocks R and S have the following probability distributions of returns: RETURN PROBABILITY STOCK R STOCK S 0.5 -2% 20% 0.1 10 12 0.4 15 i. Calculate expected return for each stock. ii. Calculate the standard deviation of returns for each stock. Which stock is considered riskier with respect to total risk? Compute the coefficient of variation for each stock. According to the coefficient of ii. variation, which stock is considered riskier?
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