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a) You are considering investing in a project with the following possible outcomes: States Probability of Investment Occurrence Returns A 18% 20% Investment Return B

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a) You are considering investing in a project with the following possible outcomes: States Probability of Investment Occurrence Returns A 18% 20% Investment Return B -15% 42% 16% 5% State 1: Economic boom State 2: Economic growth State 3: Economic decline State 4: Economic in depression 30% 3% 12% 10% -25% 18% Calculate the expected rate of return and standard deviation of returns for these investments, respectively. (20 marks) 4 4

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