1. Following table shows probability distributions stock returns of companies at different economic conditions.

Economy	Prob.	Boeing	Walmart	Facebook
Bust	0.15	-20%	5%	3%
Below avg.	0.25	-4%	8%	6%
Avg.	0.5	16%	10%	12%
Above avg.	0.2	22%	11%	20%
Boom	0.1	35%	12%	20%

1. Calculate expected return, variance, and standard deviation of each company. You must have to show how you calculate step by step and what formula you use. You might use excel to double check but in this homework, it is required to show your calculation in detail. (5 points)

2. If your goal is to select the stock with the lowest risk, then which stock should you select and why? (5 points)

2. Currently, Federal Reserve is fighting with inflation through the attempts of increasing interest rate. Explain what could happen to equity prices if people have following alternative expectation for the next 2 years in the face of rising interest rates

a) More decrease in overall supply of goods and services. (5 points)

b) Increase in overall supply of goods and services. (5 points)