1. (40 points) Suppose that three states of the economy (Recession, Normal economy, and Boom) will occur with the given probabilities in the table below. The table also includes the rate of returns on Stock A and Stock B for each state of the economy. Rate of Return State of the Economy Probability Stock A Stock B Recession 0.30 -5% - 10% Normal Economy 0.50 10% 15% Boom 0.20 20% 30% a. Calculate the expected rate of return and the standard deviation of retums for each stock. b. Assume that you construct a portfolio with the weight of 0.60 in Stock A and the weight of 0.40 in Stock B. Calculate the expected rate of return and the standard deviation of returns of the portfolio