a) You are considering investing in a project with the following possible outcomes:

Probability of Investment Investment States Occurrence Returns A Return B State 1: Economic boom 18% 20% -15% State 2: Economic growth 42% 16% 5% State 3: Economic decline 30% 3% 12% State 4: Economic in depression 10% -25% 18%Security A Security B Expected Return = 14% Expected Return = 16% Standard Deviation of Returns = 16% Standard Deviation of Returns = 20% Beta = 1.2 Beta = 1-2