Home assignment4 Consider following information: Probability of the state of economy Rate of return if state occurs StockA StockB 0.2 0.8 0.4 0.2 0.12 boom normal 0.05 a. Calculate the expected return of each stock. b. Calculate the variance and standard deviation of each stock. c. Calculate the covariance between stock A and B returns and the correlation coefficient. Calculate the expected return of the portfolio (Portfolio!) consisting 40% of stock A and 60% of stock B. d. e. Calculate the variance and standard deviation of this portfolio. Based on CAPM calculate each stock beta if risk-free asset expected return is 2% and market risk premium is 5% Which stock has the lowest systematic risk? Which stock has the lowest total risk? Which stock is "safest" Explain. What is the beta of the Portfolio1? g. h