2. Stock A is expected to produce the following returns given various states of the economy: Table 1 - Stock A Probability of State of State of Economy Economy Possible Return Good 40% 25% Bad 60% 15% Table 2 - Stock B and Stock C Stock B C Expected Return 20% 15% Standard Deviation 30% 29% Correlation Coefficient with A 0.6 -0.7 1) What is the expected return of stock A? 2) What is the standard deviation of the expected return of stock A? 3) If an investor is considering combine stock A with another stock to build a two-stock portfolio, which one of the two (Stock B or Stock C) is a better choice with the given information in Table 2 and why