Construct an equal weighted (50/50) portfolio of investments B and C. What are the expected rate of return and standard deviation of the portfolio? Explain your results.

Economic state: probability of occ B C

very poor 0.10 30% -25%

poor 0.20 20 -5

average 0.40 10 15

good 0.20 0 35

very good 0.10 -1055

Expected rate of return 10% 15%

standard deviation 1121.9%