A diversified portfolio of stocks has an expected return of 10%. You believe that if theres a recession next year, which may occur with a probability of 25%, the portfolios actual return will be -5%. In an average economy, which has 50% chance of occurring, the portfolios realized return would be exactly 10%; if the economy enters a mild recession, which may occur with a 25% probability, the portfolios return will be -5%. What is the standard deviation of this portfolio?

10. A diversified portfolio of stocks has an expected return of 10%. You believe that if there's a recession next year, which may occur with a probability of 25%, the portfolio's actual return will be 5%. In an average economy, which has 50% chance of occurring, the portfolio's realized return would be exactly 10%; if the economy enters a mild recession, which may occur with a 25% probability, the portfolio's return will be 5%. What is the standard deviation of this portfolio