(a) What is the expected return of a portfolio which is comprised of $30,000 invested in stock A and $6,000 in stock B?

(b) What is the standard deviation of a portfolio which is comprised of $30,000 invested in stock A and $6,000 in stock B?

(c) Which one of these two stocks has a greater systematic risk? Assume that the expected return on the market portfolio is 8% and T-bills yield 3%.

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5.(38 points) You are comparing stock A to stock B. Consider the following table: State of Economy Probability of State of Economy 60% 30% 10% Rate of Return if State Occurs Stock A Stock B 15% 9% 8% 4% -2% -5% Boom Normal Recession