Consider the Following Probability Distribution for Stocks C and D

question 63

Multiple Choice

Consider the following probability distribution for stocks C and D: $$\begin{array} { c c c c } \text { State } & \text { Probability } & \text { Return on Stock C } & \text { Return on Stock D } \\1 & 0.30 & 7 \% & - 9 \% \\2 & 0.50 & 11 \% & 14 \% \\3 & 0.20 & - 16 \% & 26 \%\end{array}$$ The expected rates of return of stocks C and D are _____ and _____, respectively.

• A) 4.4%; 9.5%
• B) 9.5%; 4.4%
• C) 6.3%; 8.7%
• D) 8.7%; 6.2%
• E) None of the options are correct.

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