Idaho Slopes (IS) and Dakota Steppes (DS) are both seasonal businesses. IS is a downhill skiing facility, while DS is a tour company that specializes in walking tours and camping. The equally likely returns on each company over the next year is expected to be:

Economy	Idaho Slopes	Dakota Steppes
Strong Downturn	-10%	2%
Mild Downturn	-4%	7%
Slow Growth	4%	6%
Moderate Growth	12%	4%
Strong Growth	20%	4%

If IS and DS are combined in a portfolio with 50% invested in each, the expected return and risk would be:

Multiple Choice

• 4.5%; 0%.

• 8.0%; 8.2%.

• 5.625%; 37.2%.

• 5.0%; 0%.

• 4.5%; 5.48%.