(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%
- A. Given the information in the table, what is the expected rate of return for stock B?
- What is the standard deviation of stock B?
- What is the expected rate of return for stock A?
- Based on the risk (as measured by the standard deviation) and return of each stock which investment is better? (Round to 2 decimal places
Answer a) Expected rate of return for stock B = 8.75% b) Standard deviation of stock B =... View the full answer