# EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: Probability A B 0.

**EXPECTED RETURNS**

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

**Probability A B**

0.1 (14%) (29%)

0.2 2 0

0.3 15 21

0.3 21 28

0.1 29 50

- Calculate the expected rate of return, rB, for Stock B (rA = 12.70%.) Do not round intermediate calculations. Round your answer to two decimal places.

- Calculate the standard deviation of expected returns, σA, for Stock A (σB = 20.48%.) Do not round intermediate calculations. Round your answer to two decimal places.

- Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places.

- Is it possible that most investors might regard Stock B as being less risky than Stock A?