After you have done an extensive analysis of the economy, Stock X, and Stock Y, you make the following forecasts:

State of Economy	Probability of Occurrence	Stock X Expected Return	Stock Y Expected Return
Boom	30%	20%	-12%
Normal	45%	12%	20%
Bust	25%	-8%	30%

Suppose you plan to invest in a portfolio with 40 percent of the funds in Stock X and 60 percent in Stock Y. The market return is 12 percent with a standard deviation of 16 percent. The risk-free rate is 5 percent.

a) What are the expected returns of Stock X and Stock Y?

b) What are the standard deviation of the returns of Stock X and Stock Y?

c) What is the covariance of the returns on Stock X and Stock Y?

d) What is the correlation between Stock X and Stock Y?

e) What is the expected return on the portfolio?

f) What is the standard deviation of the portfolio?

g) What is the Sharpe ratio of the portfolio?