Can you help work it out on Excel?

There are two stocks. One, Campbell Soup is a nice safe investment that generally provides a positive return. It does even better in a recession than in an economic boom because soup is a cheap and simple meal. It has an expected return in boom times of 2.3% and an expected return in a recession of 4.4%.

The other stock, Carnival Cruise Line does extremely well in economic booms when everyone is employed and has plenty of spending money and is taking cruises. However, it does really poorly when there is a recession. It has an expected return in boom times of 21% and an expected return in a recession of -9%.

You will need to calculate the expected return and standard deviation of each of these stocks. Assume that there is a 50% chance of a recession and a 50% chance of a boom.

Now we will put them in a portfolio. We will have 60% of our portfolio be Campbells Soup and the remaining 40% of the portfolio be Carnival Cruise Lines. Assuming that there is a 50% chance of a recession and a 50% chance of a boom, calculate the expected return and standard deviation of the portfolio.

Use the data in the information document to answer this questions.

Suppose we put our two stocks together into a portfolio using the weights given.

What is our portfolio's expected return?

	A.	1.8%
	B.	2.76%
	C.	3.90%
	D.	4.41%

Use the data in the information document to answer this questions.

Suppose we put our two stocks together into a portfolio using the weights given.

What is the standard deviation of our portfolio's expected return?

	A.	4.73%
	B.	5.37%
	C.	15.68%
	D.	27.34%