Consider the following forecasts of returns on two risky assets (r₁ and r2), risk-free asset (r_f), and the market (r_M):

Compute the expected returns, standard deviations for both securities (E(r₁), 1, E(r₂), and 2)1 and the market (E(r_M) and _M), as well as 1 and 2.

Probability T12 State (Scenario) 1 (Extreme boom) 2 (Boom) 3 (Normal growth) 4 (Recession) 5 (Extreme recession)0.15 0.1 0.15 0.4 0.2 9% 5% 4% 6% 8% 7% 12% 10% 300 -9% If 5.66% 5.66% 5.66% 5.66% 5.66% TM 12% 10% 8% 6% -2%