Expected Return and Standard Deviation This problem will give you some practice calculating measures of prospective portfolio performance. There are two assets and three states of the economy:

State of economy Probability of state of economy Rate of return if state occurs Equity A

Equity B

Recession 0.20 −0.15 0.20 Normal 0.50 0.20 0.30 Boom 0.30 0.60 0.40 What are the expected returns and standard deviations for these two equities?