Company A

State of the economy	Probability of occurrence	% return given that state
Recession	30%	12%
Stable	60%	18%
Boom	10%	25%

Company B

State of the economy	Probability of occurrence	% return given that state
Recession	30%	9%
Stable	60%	14%
Boom	10%	16%

What is the return of X-Corp over the year?

What is the expected return and standard deviation of Company A?

What is the expected return and standard deviation of Company B?

Which Stock provides the best investment based on the risk? Is there a reward tradeoff?

What is the expected return and standard deviation of a portfolio consisting of 40% invested in Stock A and 60% invested in Stock B given a correlation coefficient of .61?