Problem 8-07

You are considering two stocks and have determined the following information:

Stock A	Return		Probability of the Return
	21	%	10	%
	15		30
	8		60

Stock B	Return		Probability of the Return
	20	%	25	%
	15		55
	7		20

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: %

-Select -Stock A or Stock B has the higher expected return.

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:

-Select-Stock A or Stock B 6 is riskier?

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

-Select- Stock A or Stock B is preferred?