DIABOLCUC abe Xx2 U AbbceDdEt Aalbl A- Normal No Spacing Heading 1 Heading 2 probability of a normal economy is 60 percent while the probability of a recession and boom is 20 percent each. Given this information, what is the expected return and variance of the returns on this stock? 4. (20 pts.) You are given the following information about the stocks in a two-stock portfolio: Stock The Blue Hotel, Inc. Joys Food, Inc. Return 22% 25% Portfolio Weight 45% 55% Standard Deviation 9% 11% Correlation coefficient between the two stocks is 0.5. a. Using the information above, calculate the following: The expected return of the portfolio, b. The variance of the portfolio, The standard deviation of the portfolio. c. 5. (20 pts.) See below the expected returns and standard deviation of returns for five restaurant stocks. Which one of these stocks is most attractive to a risk-averse investor? Why? Stock Return Standard Deviation