Expected returns=Sum(probability*returns)
Standard deviation=sqrt(Sum(probability*(returns-expected returns)^2))
Coefficient of variation=Standard deviation/Expected returns
Sharpe Ratio=(Expected returns-risk free rate)/standard deviation
1.
=0.1*(-25%)+0.1*0%+0.5*19%+0.2*30%+0.1*50%
=18.000%
2.
=sqrt(0.1*(-6%-15.30%)^2+0.1*(5%-15.30%)^2+0.5*(16%-15.30%)^2+0.2*(18%-15.30%)^2+0.1*(38%-15.30%)^2)
=10.450%
3.
=18.68%/18.000%
=1.03778
4.
Option V
5.
=(15.30%-4.5%)/10.450%
=1.033
6.
=(18.000%-4.5%)/18.68%
=0.723
7.
Option V
8.6 Stocks A and B have the following probability distributions of expected future returns: Probability 0.1 (25%) 0.1 0...
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