Question

PLEASE SHOW STEP BY STEP DETAIL ESPECIALLY​ HOW TO FIND THE STANDARD DEVIATION AND COEFFICIENT OF VARIATION ON THE CALCULATOR.

Stocks A and B have the following probability distributions of expected future returns:

Probability	A	B
0.1	(14%)	(31%)
0.2	6	0
0.3	10	18
0.2	19	26
0.2	34	49

Calculate the expected rate of return, r_B, for Stock B (r_A = 13.40%.) Do not round intermediate calculations. Round your answer to two decimal places.
%

Calculate the standard deviation of expected returns, σ_A, for Stock A (σ_B = 22.57%.) Do not round intermediate calculations. Round your answer to two decimal places.
%

Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places.

Answer 1

1.expected rate of return, rB=Respective return*Respective probability

=(0.1*-31)+(0.2*0)+(0.3*18)+(0.2*26)+(0.2*49)=17.3%

2.

Probability	Return	Probability*(Return-Expected Return)^2
0.1	-14	0.1*(-14-13.4)^2=75.076
0.2	6	0.2*(6-13.4)^2=10.952
0.3	10	0.3*(10-13.4)^2=3.468
0.2	19	0.2*(19-13.4)^2=6.272
0.2	34	0.2*(34-13.4)^2=84.872
		Total=180.64%

Standard deviation=[Total of Probability*(Return-Expected Return)^2/Total Probabiity]^(1/2)
=(180.64)^(1/2)

=13.44%(Approx)

Coefficient of variation for B=Standard deviation/Expected Return

=(22.57/17.3)

which is equal to

=1.30(Approx).