Economic State	Probability of State	Return on Stock A	Return on Stock B
normal	30%	13%	3%
recession	70%	-8%	8%

What is the standard deviation of a portfolio that is invested 60% in stock A and 40% in stock B

• 4.06%

• 5.51%

• 1.58%

• 2.36%

• 4.86%

• 4.06%

• 5.51%

• 1.58%

• 2.36%

• 4.86%