1. Consider the following data for stocks and bonds in the scenario analysis and a portfolio with weights of 0.40 in stocks and 0.60 in bonds.

		Rate of Return
Scenario	Probability	Stocks	Bonds
Severe recession	0.05	-37%	-9%
Mild recession	0.25	-11%	15%
Normal growth	0.40	14%	8%
Boom	0.30	30%	-5%

(a) What is the expected return of stocks?

(b) What is the expected return of bonds?

(c) What are the expected return and standard deviation of the portfolio?