Problem $8-07$

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 riskier.

c$.$ Given your answers to the two previous questions, what stock is preferred?

is preferred.