Chapter 8 EOC problems Problem 8-07 You are considering two stocks and have determined the following information: eBook The return on Stock A: The return on Stock B: Standard deviation of Stock A: Standard deviation of Stock B: a. Which of the two stocks has the higher expected return? Round your answers to two decimal places. Stock B 16.35 Stock Av 15.3 % % Stock A .08 Stock B Stock A has the higher expected return. b. Which stock is riskier? Do not round intermediate calculations. Round your answers to two decimal places. .10 Return 24% 15 6 Return 31% 12 8 * Probability of the Return 50% 15 35 Probability of the Return 30% 10 60 is riskier. c. Given your answers to the two previous questions, what stock is preferred? is preferred.

You are considering two stocks and have determined the following information: a. Which of the two stocks has the higher expected return? Round your answers to two decimal places. The return on Stock A : % The return on Stock B: % has the higher expected return. b. Which stock is riskier? Do not round intermediate calculations. Round your answers to two decimal places. Standard deviation of Stock A: Standard deviation of Stock B: is riskler. c. Glven your answers to the two previous questions, what stock is preferred? is preferred