(1) Your friend is an excellent baker and suggests that the two of you open a gourmet cupcake chain, Baked. He will take care of the cupcakes and you are in charge of managing all of the finances. You do some research and determine that it will cost you $7 million today to start the business. Fortunately, you happen to have $7 mil- lion in cash sitting in your bank account! You also determine (with certainty) what the business will be worth in a year in the following three possible future states of the world: Economy Realized Return value of Cupcake Realized Return on Probability Health on the Market Business in 1 Year $7M Investment Good 15% $10M Average 9% $8M Bad $6M -3% Assume the risk free rate is 0%. (a): What is the realized holding period return on investment for each of the possible three states of the world? (b): What's the expected rate of return? (c): What is B for the cupcake business? (This is simple to do by hand but if using Excel, be careful about population vs sample calculations)