Purchase Solution

# Calculate the expected rates of return for the market and Stock A, the standard deviation for the market and Stock A and the coefficients of variation for the market and Stock A.

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The market and Stock A have the following probability distributions:

Probability km (Market) kA (Stock A)
0.3 15% 20%
0.4 9 5
0.3 18 12

a. Calculate the expected rates of return for the market and Stock A.
b. Calculate the standard deviations for the market and Stock A.
c. Calculate the coefficients of variation for the market and Stock A.

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##### Solution Summary

This solution calculates the expected rates of return, the standard deviations, and the coefficients of variation for the market and Stock A.

##### Solution Preview

a. Calculate the expected rates of return for the market and Stock A.
E(Km)=SUM(Pri*Kmi)=.3*15+.4*9+.3*18=13.5%
E(Ka)=SUM(Pri*Kai)=.3*20+.4*5+.3*12=11.6%

b. ...

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