roblem 6-4 (similar to Question Help Expected rate of return and risk) Summervil

Question

roblem 6-4 (similar to Question Help Expected rate of return and risk) Summerville Inc. is considering an investment in one of two common stocks. Given the information in the popup window:?, which vestment is better, based on the risk (as measured by the standard deviation) and return of each? ·The expected rate of return for Stock A is | %. (Round to two decimal places) Data Table COMMON STOCK A COMMON STOCK B PROBABILITY 0.30 0.40 0.30 RETURN 10% 16% 20% PROBABILITY 0.15 0.35 0.35 0.15 RETURN -5% 6% 16% 21% (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.) nter your answer in the ans Print Done parts Check Answer

Explanation / Answer

Expected return of stock A = probability * return

=0.3*10 + 0.4*16 + 0.3*20

= 15.40%

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.