16. Scenario Analysis. The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: (LO11-3) Chapter 11 Introduction to Risk, Return, and the Opportunity Cost of Capital 359 Boom Normal economy Recession Dividend Stock Price $0 $18 1 3 34 26 a. Calculate the expected return and standard deviation of Escapist. All three scenarios are equally likely b. Now calculate the expected return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita (from Problem 15). Show that the portfolio stan- dard deviation is lower than that of either stock. Explain why this happens, 16. Scenario Analysis. The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: (LO11-3) Chapter 11 Introduction to Risk, Return, and the Opportunity Cost of Capital 359 Boom Normal economy Recession Dividend Stock Price $0 $18 1 3 34 26 a. Calculate the expected return and standard deviation of Escapist. All three scenarios are equally likely b. Now calculate the expected return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita (from Problem 15). Show that the portfolio stan- dard deviation is lower than that of either stock. Explain why this happens