1. Given the following information, answer the following questions (20 points) (Please show the detail of your work)

		Price per Share
State of Economy	Probability	Stock A	Stock B	Stock C
Boom	0.40	15%	18%	20%
Bust	0.60	10%	0%	-10%

1. What is the expected return of stock A, B, and C? (5 points).

E(R_A) =

E(R_B) =

E(R_C) =

2. What is the standard deviation of stock A, B, and C? (5 points).

_A =

_B =

_C =

3. What is the expected return, E(R_P), and standard deviation, _P, for a portfolio that has 35 percent invested in stock A, 45 percent in stock B, and the balance in stock C? (10 points)