1) Consider the following information:

State of the economy	Probability of state of economy	Return on A (%)	Return on B (%)
Boom	0.2	10	5
Growth	0.3	-2	0
Normal	0.3	20	15
Recession	0.2	15	20

1. What is the expected return for A? For B? [5 marks]
2. What is the standard deviation for A? For B? [5 marks]
3. What is the expected return and variance of a portfolio that is 50 per cent invested in A and 50 per cent in B? [5 marks]