3 (25 MARKS) a) You are considering investing in a project with the following possible outcomes: States Probability of Occurrence Investment Returns A Investment Return B State 1: Economic boom 18% 20% -15% State 2: Economic growth 42% 16% 5% State 3: Economic decline 30% 3% 12% State 4: Economic in depression 10% -25% 18% Calculate the expected rate of return and standard deviation of returns for these investments, respectively. b) You are thinking of adding one of two investments to an already well-diversified portfolio. Security A Expected Return = 14% Security B Expected Return = 16% Standard Deviation of Returns = 16% Beta = 1.2 Standard Deviation of Returns = 20% Beta = 1.2 If you are a risk-averse investor, justify which one is the better choice