Calculate the standard deviation of expected returns

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

a. Calculate the expected rate of return, rY, for Stock Y rX = 12% .

b. Calculate the standard deviation of expected returns sX, for Stock X(sY 20 35%) .

Now calculate the coefficient of variation for Stock Y. Is it possible that most investors will regard Stock Y as being less risky than Stock X? Explain.

Reference no: EM131118551

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