Syntex is considering an investment in one of two stocks. Given the information that follows, which investment is better, based on the risk (the standard deviation) and return?

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Syntex is considering an investment in one of two stocks. Given the information that follows, which investment is better, based on the risk (the standard deviation) and return?

 

Common Stock  A                                            Common Stock B           

Probability             Return                               Probability             Return

0.20                          10%                                   0.10                        -7%

0.60                          16%                                    0.40                        5%

0.20                          21%                                     0.40                      13%

                                                                               0.10                     20%


Given the information in the table, what percent is the rate of return for Stock A?

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