b) Mrs Daisy is considering two securities, A and B, and the relevant information is given below: State of Economy Probability Return on Security A (%) Return on Security B (%) Bear 0.6 3.00% 6.50% Bull 0.4 L 15.00% 6.50% 1. Calculate the expected returns and standard deviations of security A and security B. (5 marks) 2. Explain how diversification can reduce the unsystematic risk of a given portfolio