1. IDC Inc. stock has the following probability distribution of expected prices and dividends one year from now: Economic Condition Probability Stock Price $50 1 30% $60 2 45% $70 25% If you buy stock IDC today for $55 and the stock pays a $4 dividend per share, what is a. your expected 1-year holding-period return? b. What is the return standard deviation? Stock CDI Inc. is currently trading at 55$ a share, as well. The expected prices for stock c. CDI in states 1, 2 and 3 are $64, $55 and $52, respectively. Stock CDI does not pay a dividend. What is the correlation between the returns of stock IDC and stock CDI? d. Consider a portfolio invested 20% in stock IDC and 80% in stock CDI - what would its expected return and volatility be? e. What is the minimum variance portfolio comprised of these two stocks? f. Plot the investment opportunity set for stock IDC and stock CDI. (You can use the spreadsheet 'corr.xls' on the course website: substitute the expected return, variance and correlation values with the ones in the question.)