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  3. stocks a and b have the following probability dist

Stocks A and B have the following probability distributions of expected future returns: ...

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Finance

Stocks A and B have the following probability distributions of expected future returns:

Probability A B
0.1 (5 %) (37 %)
0.1 3 0
0.6 14 21
0.1 20 29
0.1 31 45
  1. Calculate the expected rate of return, , for Stock B ( = 13.30%.) Do not round intermediate calculations. Round your answer to two decimal places.

    %

  2. Calculate the standard deviation of expected returns, A, for Stock A (B = 20.55%.) Do not round intermediate calculations. Round your answer to two decimal places.

    %

    Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places.

  3. Assume the risk-free rate is 3.5%. What are the Sharpe ratios for Stocks A and B? Do not round intermediate calculations. Round your answers to four decimal places.

    Stock A:

    Stock B:

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