(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 risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return .30 11% .20 25% .40 15% .30 6% .30 19% .30 14% .20 22%
(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 risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return .30 11% .20 25% .40 15% .30 6% .30 19% .30 14% .20 22%
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 1P
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- (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 risk (as measured by the standard deviation) and return?
Common Stock A |
Common Stock B |
||
Probability |
Return |
Probability |
Return |
.30 |
11% |
.20 |
25% |
.40 |
15% |
.30 |
6% |
.30 |
19% |
.30 |
14% |
|
|
.20 |
22% |
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