In Cooltown there are 3 states of the economy: "not bad," "good," and "totally awesome." There are two stocks with returns in each state as follows: State Likelihood Stock 2 return 6% 15% Stock 1 return 2% 5% 1/4 1/2 1/4 Not Bad Good Totally Awesome 16% 48% Answer the following questions (clearly label the parts in your typed response): 3. It, instead of the given likelihoods, the states were equally likely, to what extent would your answers to the above questions change? (2 points) 4. Suppose there is also a risk-free asset and that all assets can be freely traded without cost. What should be true about the risk-free return (beyond it being the same in each state)? (2 points)