Question

​(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		Common Stock B
Probability	Return	Probability	Return
0.20	13​%	0.25	−4​%
0.60	16​%	0.25	8​%
0.20	18​%	0.25	15​%
		0.25	23​%

a. Given the information in the​ table, the expected rate of return for stock A is %?

b. Given the information in the​ table, the expected rate of return for stock B is %?

c. Given the information in the​ table, the Standard Deviation for Stock A is %?

d. Given the information in the​ table, the Standard Deviation for Stock B is %?

​(Round to two decimal​ places.)

Answer 1