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2. Assume that the economy can be in three possible states next year: boom, normal, or slow economic growth. An expert source has calculated that

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2. Assume that the economy can be in three possible states next year: boom, normal, or slow economic growth. An expert source has calculated that P(boom)=.30, P(norma|)=.50, and P(Slow)=.20. The returns for Stock A, RA, and Stock B, RB, under each of the economic states are provided in the table. a) What is the expected value and standard deviation of the returns for stock A. b) What is the expected value and standard deviation of the returns for stock B. c) What is the joint probability distribution for the returns of stock A and stock B? d) What are the covariance and the correlation coefficient of returns of stock A and stock B? Event P(S) RA R B .30

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