Darren Has the Option of Investing in Either Stock a or Stock

Multiple Choice

Darren has the option of investing in either Stock A or Stock B. The probability of the return of Stock A being 25% is 0.45, 14% is 0.25, and 4% is 0.30. The probability of the return of Stock B being 30% is 0.30, 9% is 0.25, and 2% is 0.30. Given the probability distributions for the two investments, what is the expected rate of return for Stock A and Stock B?

A) 13.65%; 12.85%
B) 14.75%; 13.75%
C) 15.95%; 11.85%
D) 16.80%; 11.45%
E) 17.82%; 11.95%