Question: Please only work on this is you understand it. Please also provide how to solve using excel, thank you. 8-6 EXPECTED RETURNS Stocks A and

Please only work on this is you understand it. Please also provide how to solve using excel, thank you.

Please only work on this is you understand it. Please also provide

8-6 EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: a. Calculate the expected rate of return, rB, for Stock B(rA=12%). b. Calculate the standard deviation of expected returns, A, for Stock A (B=20.35%). Now calculate the coefficient of variation for Stock B. Is it possible that most investors will regard Stock B as being less risky than Stock A? Explain. c. Assume the risk-free rate is 2.5%. What are the Sharpe ratios for Stocks A and B? Are these calculations consistent with the information obtained from the coefficient of variation calculations in part b? Explain

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