Compute the expected return e ri on this stock the

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Reference no: EM13573329

Your rate of return expectations for the stock of Kayleigh Computer Company during the next year are:

KAYLEIGH COMPUTER CO.

Possible Rate of Return

Probability

-0.60

0.15

-0.30

0.1

-0.10

0.05

0.2

0.4

0.4

0.2

0.8

0.1

a. Compute the expected return [ E ( Ri ) ] on this stock, the variance (s2) of this return, and its standard deviation (s).

b. On the basis of expected return [ E ( Ri ) ] alone, discuss whether Gray Disc or Kayleigh Computer is preferable.

c. On the basis of standard deviation (ó) alone, discuss whether Gray Disc or Kayleigh Computer is preferable.

d. Compute the coefficients of variation (CVs) for Gray Disc and Kayleigh Computer and discuss which stock return series has the greater relative dispersion.

Reference no: EM13573329

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