Question: Problem 8-6. Expected returns Stocks X and Y have the following probability distributions of expected future returns: PROBABILITY X Y 0.1 - 13% - 39%

Problem 8-6. Expected returns

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

PROBABILITY X Y
0.1 - 13% - 39%
0.2 2 0
0.3 13 20
0.2 21 30
0.2 31 39

a. Calculate the expected rate of return, , for Stock Y.( = 13.40%.) Round your answer to two decimal places.

b. Calculate the standard deviation of expected returns, , for Stock X. ( = 22.44%.) Round your answer to two decimal places.

c. Now calculate the coefficient of variation for Stock Y. Round your answer to two decimal places.

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