Problem 8-6 Expected returns Stocks A and B have the following probability distributions of expected future returns: Probability A -10 % 0.1 -29% 0.3 0 0.3 13 18 0.2 22 26 0.1 29 36 a. Calculate the expected rate of return, rB, for Stock B (FA 10.80 %. ) Do not round intermediate calculations. Round your answer to two decimal places. 17.84 %. ) Do not round intermediate calculations. Round b. Calculate the standard deviation of expected returns, aA, for Stock A (aB your answer to two decimal places % c. Now calculate the coefficien of variation for Stock B. Round your answer to two decimal places. d. Is it possible that most investors might regard Stock B as being less risky than Stock A? 1. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. II. If Stock B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense. III. If Stock B is more highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be less risky in a portfolio sense. IV. If Stock B is more highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. V. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense. -Select