(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.25 0,50 0.25 Return 10% 17% 18% Common Stock B Probability 0.10 0.40 0.40 Return -4% 7% 13% 20% 0.10 (Click on the icon in order to copy its contents into a spreadsheet) a. Given the information in the table, the expected rate of return for stock A is 15.5% (Round to two decimal places) The standard deviation of stock A is (Round to two decimal places)
(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.25 0,50 0.25 Return 10% 17% 18% Common Stock B Probability 0.10 0.40 0.40 Return -4% 7% 13% 20% 0.10 (Click on the icon in order to copy its contents into a spreadsheet) a. Given the information in the table, the expected rate of return for stock A is 15.5% (Round to two decimal places) The standard deviation of stock A is (Round to two decimal places)
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 3P
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Transcribed Image Text:(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on
the risk (as measured by the standard deviation) and return?
Common Stock A
Probability
0.25
0,50
0.25
Probability
0.10
0.40
0.40
0.10
(Click on the icon in order to copy its contents into a apreadsheet)
Common Stock B
Return
10%
17%
18%
Return
-4%
7%
13%
20%
G
a. Given the information in the table, the expected rate of return for stock A is 15.5% (Round to two decimal places)
The standard deviation of stock A is
(Round to two decimal places.)
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