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# Stocks A and B have the following probability distributions of expected future returns: $$ \begin{matrix} \text{Probability} & \text{A} & \text{B}\\ \text{0.1} & \text{(10\\%)} & \text{(35\\%)}\\ \text{0.2} & \text{2} & \text{0}\\ \text{0.4} & \text{12} & \text{20}\\ \text{0.2} & \text{20} & \text{25}\\ \text{0.1} & \text{38} & \text{45}\\ \end{matrix} $$ a. Calculate the expected rate of return,$\hat{\mathrm{r}}_{\mathrm{B}}$, for Stock B $\left(\hat{\mathrm{r}}_{\mathrm{A}}=12 \%\right)$. b. Calculate the standard deviation of expected returns, $\sigma_{\mathrm{A}}$, for Stock A$\left(\sigma_{\mathrm{B}}=20.35 \%\right)$. Now calculate the coefficient of variation for Stock B. Is it possible that most investors will regard Stock B as being less risky than Stock A? Explain.

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