Question: Problem 8-6 Expected returns Stocks X and Y have the following probability distributions of expected future returns: Probability X Y 0.2 -6% -20% 0.2 4

Problem 8-6 Expected returns

Stocks X and Y have the following probability distributions of expected future returns:

Probability X Y
0.2 -6% -20%
0.2 4 0
0.3 13 21
0.2 19 27
0.1 39 42
  1. Calculate the expected rate of return, rY, for Stock Y (rX= 11.20%.) Round your answer to two decimal places.%
  2. Calculate the standard deviation of expected returns, X, for Stock X (Y= 19.82%.) Round your answer to two decimal places.%
  3. Now calculate the coefficient of variation for Stock Y. Round your answer to two decimal places.

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