Write any formula you use, and explain how you arrive at the answer in your own words.

Write the name of any financial function you use, the inputs to it, and your input entries so I can understand how you got to your solution.

The following probability distributions of returns for two stocks have been estimated:

Probability Stock A Stock B

0.3 12% 5%

0.4 8 4

0.3 6 3

(a) What is the expected return and standard deviation of return for the two stocks?

(b) If you were to select only one of the two stocks, which one would you select and why (answer should be at most three sentences)?