Given the following information:

State Probability X Y

Boom .15 2% -30%

Normal .50 10% 18%

Recession .35 15% 31%

a. Calculate the expected return and the standard deviation for X and Y respectively.

b. What is the expected return for a portfolio with an investment of $7,000 in asset X and $3,000 in asset Y? [Hint: Calculate portfolio weights, W_x and W_y , first.]

c. Calculate the standard deviation for this portfolio using three methods:

1. Use Formulas (5) and (6)
2. Use Formula (10)
3. Use Formulas (11)

SHOW HOW TO DO MANUALLY. WITHOUT EXCEL PLEASE.

C Get Homework Help With Chegg X APR = [(1 + EAR)1-1] *n 0 File C:/Users/User/Downloads/Formula%20Sheet.pdf APR = [(1+EAR)1-1] *n 1 1 1 100% + E(Rp)=[w; x E(R;)] (4) For each state economy (s = 1, 2, ...n), get E(R) = w; E(R) (5) El. ((Reps)- E(Rp)}] (6) Covariance of two securities, 1 and 2: Cov(Ry, R)= P[E(Rz) E(R)]E[R,) E(R)] (7) S=1 Cov(R, R) Correlation coefficient of two securities, 1 and 2: Cor(R1,R2) = P2 = (8) Two-Risky-Assets Portfolio with two securities 1 and 2: (9) (10) E(Rp)= w; E(R, )+w2E(R2) Op = V(w,g)? +(W202)+ 2w,w2Cov(R,,R2) op (w,g)2+(w202)+ 2w,W2070,Corr(R,,R2) oz w (min) = o +o - 20,02P12 (11) -0102P12 (12) INP. 2 IAP 7:20 PM Type here to search 4/17/2021 C Get Homework Help With Chegg X APR = [(1 + EAR)1-1] *n 0 File C:/Users/User/Downloads/Formula%20Sheet.pdf APR = [(1+EAR)1-1] *n 1 1 1 100% + E(Rp)=[w; x E(R;)] (4) For each state economy (s = 1, 2, ...n), get E(R) = w; E(R) (5) El. ((Reps)- E(Rp)}] (6) Covariance of two securities, 1 and 2: Cov(Ry, R)= P[E(Rz) E(R)]E[R,) E(R)] (7) S=1 Cov(R, R) Correlation coefficient of two securities, 1 and 2: Cor(R1,R2) = P2 = (8) Two-Risky-Assets Portfolio with two securities 1 and 2: (9) (10) E(Rp)= w; E(R, )+w2E(R2) Op = V(w,g)? +(W202)+ 2w,w2Cov(R,,R2) op (w,g)2+(w202)+ 2w,W2070,Corr(R,,R2) oz w (min) = o +o - 20,02P12 (11) -0102P12 (12) INP. 2 IAP 7:20 PM Type here to search 4/17/2021