1. Assume that you are considering selecting assets from among the following four candidates:

Market probability Condi Oon Probability

Assume that there is no relationship between the amount Of rainfall and the condition of the stock market.
B.
C.
Solve for the expected return and the standard deviation Of return for each sepa-
rate investment.
Solve for the correlation coeffcient and the covariance between each pair of Solve for the expected return and variance of each of the portfolios shown below.

D. Plot the original assets and each of the portfolios from Part C in expected return standard deviation space.

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Asset 3 Asset 4 Market Condition Return Probability Rainfall Return Probability Good 20 Plentiful 16 Average 14 Average 12 Poor 00 8 Light 00