1. Consider the returns for two stocks and the market over the past 10 years.

Year	A	B	Mkt
1	-6.99	-1.46	-.87
2	13.75	16.53	8.07
3	3.53	9.53	12.97
4	0.64	8.51	14.81
5	18.52	15.65	15.87
6	-4.7	6.73	12.07
7	-5.58	4.7	3.89
8	6.86	0.25	5.10
9	21.51	10.35	13.87
10	21.3	8.63	10.01

1. You may classify each year where the market return was greater than 12% an bad economy. You may classify each year where the market return was less than 5% as good economy. Anything in the middle is a normal economy. There is a 10% chance of a good economy next year and a 40% chance of a bad economy. Using this, what is the expected return of Stock A?