(a) Compute the standard deviation of the expected return given the economic states, their likelihoods, and the potential returns. 6x Economic State Probability Return Fast Growth 0.3 25% Slow Growth 0.5 6% Recession -5% Depression 2x -17% (8 marks) (b) You are convinced your company which has a beta of 1.3 will earn a return of 15% the coming year. It is Observed that the expected rate of return on the market is 13% and the rate on T-Bills is 5%. Based on your firm's level of risk, determine the return it should earned and based on your position state, giving reasons if the firm over or under valued. (7 marks)