4. Use the following data: State of the Economy Probability Stock A: Return Boom 0.2 30% Good 0.35 12% Poor 0.25 8% Recession 0.2 -20% Stock B: Return 45% 10% -15% 0% I (a) If a portfolio is formed by investing 40% of the funds in A. and 60% in B what would be the expected return on the portfolio? (b) What would be the standard deviation of the above portfolio