Calculate the expected returns of stock

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RISKS & RETURNS: A close family friend has approached you to help her determine which of the two common stocks she should invest in. Common Stock A Common Stock B Probability Return Probability Return 0.25 11% 0.25 -5% 0.15 15% 0.25 6% 0.50 19% 0.25 14% 0.25 22%.

1. Calculate the expected returns of stock A

2. Determine the risk (standard deviation) and return of stock A

3. Calculate the expected returns of stock

4. Determine the risk (standard deviation) and return of stock B.

5. Which investment should your friend invest in?

6. Jenny has decided that she will invest her $100,000 savings in stocks as follows: Company Percentage of investment Expected rate of return Standards Company Limited 35% 9% Starbucks 15% 12% Treasury Bill 40% 4%

Required: What rate of return should Jenny expects to receive on her portfolio?

Reference no: EM133272774

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