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Consider the following rates of return if a state occurs: Stock C Stock D State of Economy Boom Good Poor Probability of State of Economy

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Consider the following rates of return if a state occurs: Stock C Stock D State of Economy Boom Good Poor Probability of State of Economy 0.30 0.45 0.25 Market portfolio 0.22 0.10 0.18 0.07 0.27 0.06 -0.15 -0.02 -0.03 a. What is the expected return on an equally weighted portfolio of Stocks C and D? Please show your calculations. b. What is the standard deviation of a portfolio invested 30% in Stock C and 70% in Stock D? Please show your calculations. What is the beta of Stock D? How do you interpret it? Please show your calculations and explain. c

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