Answers to any of a-e welcome. Would like to see work if possible.

5. Look at the table below. There are two risky stocks, A and B. Their returns are Ra and Rs. The returns are stochastic, and depend on the state of the economy. State of the economy Recession Normal Boom Probability 0.3 0.4 0.3 RA -0.11 0.13 0.27 RB 0.16 0.06 -0.04 a. c. Calculate the expected return of A and of B. b. Calculate the standard deviation of A and of B. Which asset has the smallest risk? Calculate the covariance between A and B, and the correlation coefficient. d. Now we perform some diversification. Calculate the expected return of a portfolio that invests 30% in stock A and 70% in stock B. Calculate the standard deviation of this diversified portfolio. Is it bigger or smaller than the smallest variance of assets A and B? e