Following table shows information on probable scenarios and associated return of an equity Y. (Note: You must have to show the calculation)

1. Following table shows information on probable scenarios and associated return of an equity "Y". (Note: You must have to show the calculation) State Probability of Return in state State 0.25 Excellent Good Poor Worse Crash 0.25 0.10 0.05 0.22 0.12 0.03 -0.02 -0.10 a) Calculate the expected return of the equity "Y". (5 points) b) Calculate the standard deviation of the equity "Y". (5 points) c) Consider a risk-free asset"X" of which the rate of return is 5%. Create a portfolio that consists of the risky equity "Y" and the risk-free asset "X". Calculate portfolio return and standard deviation for each of following set of allocation of investment budget Allocation in equity Allocation in risk-free asset Portfolio return Portfolio SD 0.2 0.3 0.4 0.5 0.6 0.9 0.8 0.7 0.6 0.5 0.4 0.8 0.9 Draw a capital allocation line with horizontal axis showing portfolio SD and the vertical axis showing portfolio return. (5 points) d) Calculate and interpret the Sharpe ratio. (5 points)