Assume there is a stock that can increase by 40% in a year with probability 1/3 or decrease by 20% in a year with probability 2/3. You are concerned with investing over a period of 2 years. Asset performance is independent between the first year and the second year.

1) For this stock, what are the possible outcomes over the two-year timespan?

2) For this stock, assume X be the random variable equal to the relative return over the two-year timespan. Let fX be the probability mass function for X. Compute fX and fill in the following table, listing each possible value of X in column 1 and each corresponding value of fx in column 2.