1. Investment analysts will exam a stock performance in the next month. If the stock price moves up, the monthly return will be 5% with 70% of probability. If the stock price drops, the monthly return will be -1.0% with 20% of probability. Otherwise, the stock price stays flat, the monthly return is zero.

What is thethe expected monthly return and standard deviationof this stock separately?ANs:12% and 6.75%. Please show steps by steps without excel

2. The table below gives statistics relating to two stocks.

	Mean Annual Return (%)	Standard Deviation of Return (%)	Skewness	Excess Kurtosis
Stock A	10	6	-0.45	-0.5
Stock B	15	12	0.25	2.5

If we have a portfolio with 60% of investment on stock A and 40% of investment on stock B and the covariance between two stocks is 0.2%, what is the portfolio return and standard deviation separately? ANs: 3.3% and 2.61%. Please show steps by step without excel