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Stocks X and Y have the following probability distributions of expected future returns..
Probability X Y
0.1 (10%) (35%)
0.2 2 0
0.4 12 20
0.2 20 25
0.1 38 45
A) Calculate the expected rate of return
B) Calculate the standard deviation of expected returns for stock X (y=20.35%) and the coefficient variation for stock Y. Is it possible that most investors with regard stock y as being less risky than stock x?
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