In the following year, there is a 10% chance of a bear market, a 20% chance of a bull market, and a 70% chance of a neutral market. Debt will return -2%, 5%, and 5% in the bear, bull and neutral market, respectively. Equity will return -15%, 15%, and 8% in the bear, bull and neutral market , respectively .

a) Expected Return on debt =10%*-2%+20%*5%+70%*5% =4.30% b) Expected Return on equity =10%*-15%+20%*15%+70%*8%=7.10% Variance =10%*(-15%-7.10%)^2+20%*(15%-7.10%)^2+70%*(8%-7.10%)^2=0.0062 Standard Deviation of equity =Variance^0.5 =0.0062^0.5 =7.87%or 7.9% c) Covariance of debt and equity =10%*(-15%-7.10%)*(-2%-4.30%)+20%*(15%-7.10%)*(5%-4.30%)+70%*(8%-7.10%)*(5%-4.30%) =.00155 d. Variance of Debt =10%*(-2%-4.30%)^2+20%*(5%-4.30%)^2+70%*(5%-4.30%)^2=0.000441 Standard Deviation =0.000441^0.5 =0.021 Correlation =Covariance/(Standard Deviation of Equity*Standard Deviation of Debt) =0.00155/(7.87%*0.021) =0.936 Need help with Question 1,2 and 3

1) What is the expected return of a risky portfolio made up of 70% bonds and 30% stock? (units of %; round to 2 decimal places)

2) What is the volatility of a risky portfolio made up of 70% bonds and 30% stock? (units of %; round to 1 decimal places) 3) What is the Sharpe ratio of the risky portfolio made up of 70% bonds and 30% stock?