Consider the following information on the economy and specific stocks and bonds: You believe that each scenario has the same probability.

State of the Economy	RD	RE	RF
(I) Depression	-10%	-5%	2%
(II) Recession	-7%	18%	2%
(III) Normal	8%	10%	2%
(IV) Boom	24%	-6%	2%

xiii. What is the expected return of a portfolio with 25% in D, 25% in E, and the remainder in F?

a. 1%

b. 2%

c. 3%

d. 4%

e. 5%

xiv. What is the total risk of a portfolio with 25% in D, 25% in E, and the remainder in F?

a. 0.0011%

b. 0.1%

c. 0.034%

d. 3.4%

e. 1.15%