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(Expected rate of return and risk) Synex, Inc is considering an investment in one of two common stocks. Common Stock A Probability .35 and the...

(Expected rate of return and risk) Synex, Inc is considering an investment in one of two common stocks.


Common Stock A Probability .35 and the Return-12%. Probability .30 and Return 17%. Probability .35 and Return 18% Common Stock B Probability .25 Return -6%. Probability .25 Return 8%. Probability .25 Return 13%. Probability .25 and the return 20%


  1. A. Given the information in the table, what is the expected rate of return for stock B?
  2. What is the standard deviation of stock B?
  3. What is the expected rate of return for stock A?
  4. Based on the risk (as measured by the standard deviation) and return of each stock which investment is better? (Round to 2 decimal places

 

Top Answer

Answer a) Expected rate of return for stock B = 8.75% b) Standard deviation of stock B =... View the full answer

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