Miss Maple is considering two securities, A and B, and the relevant information is given below:

a. Calculate the expected returns and standard deviations of the two securities.

b. Suppose Miss Maple invested \($2,500\) in security A and \($3,500\) in security B. Calculate the expected return and standard deviation of her portfolio.

c. Suppose Miss Maple borrowed from her friend 40 shares of security B, which is currently sold at \($50,\) and sold all shares of the security. (She promised her friend to pay back in a year with the same number of shares of security B.) Then she bought security A with the proceeds obtained in the sales of security B shares and the cash of \($6,000\) she owned. Calculate the expected return and standard deviation of the portfolio.

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State of Economy Probability Return on Security A (%) Return on Security B (%) Bear 0.4 3.0% 6.5% Bull 0.6 15.0 6.5