1. Consider the following information on Citigroup Inc. C and Bank of America BAC: State of Economy Recession Normal Irrational Exuberance Probability of State of Economy 0.30 0.40 0.30 Rate of Return if State Occurs C BAC 5.0% -18.0% 19.0% 14.0% 13.0% 29.0% The market risk premium is 8% and the risk-free rate is 5%. Determine the expected return and standard deviation for each stock. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is riskier overall? (90 POINTS) 2. Given the following information, calculate the expected return and standard deviation for a portfolio that has 40% invested in Summit Materials (SUM), 25% invested in Vulcan Materials (VMC) and the remaining allocation in CEMEX (CX) stock. (85 POINTS) State of Economy Boom Recession Probability of State of Economy 20.0% 80.0% Rate of Return if State Occurs SUM VMC CX 19.0% 23.0% 18.5% 2.0% -1.5% 2.5%