1. The return on the Rush Corporation in the state of recession is estimated to be -23% and the return on Rush in the state of boom is estimated to be 35%. The return on the Oberman Corporation in the state of recession is estimated to be 41% and the return on Oberman in the state of boom is estimated to be -18%. Given this information, what is the covariance between Rush and Oberman if there is a 0.40 probability that the economy will be in the state of boom and a 0.60 probability that the economy will be in the state of recession.

2. Toyota has an expected return of 24%, and a variance of 0.014. Honda has an expected return of 17%, and a variance of 0.007. The covariance between Toyota and Honda is 0.08. Using these data, calculate the variance of a portfolio consisting of 50% Toyota and 50% Honda.

3. Toyota Corp.'s stock is $25 per share. Its expected return is 24% and variance is 15%. Honda Corp.'s stock is $21 per share. Its expected return is 15% and variance is 9%. Benz Corp.'s stock is $40 per share. Its expected return is 12% and variance 5%. What would be the expected return of a portfolio consisting of 50% Toyota and 50% Honda? ______%

4. The return on shares of the Orange Company are predicted under the following states of nature. The states of nature are all equally likely, and because there are a total of three states, each state has a 33.333% chance of occurring. Recession -0.13 Normal +0.04 Boom +0.20 What is the standard deviation of Orange?