Joe is a new investor and has been closely watching a company by the name of USA Ltd., a pharmaceutical company aiming to develop a coronavirus vaccine.

Joe believes the following returns are possible in 2022 and has attached a probability to each potential outcome:

Probability	Possible Return
.20	185.00%
.30	83.50%
.30	-5.00%
.20	-100.00%

a) Calculate the Expected Return for USA Ltd. in 2022. (2 marks)

Show formula, calculation and a concluding statement in your response.

b) Calculate the Risk (Standard Deviation) for USA Ltd. in 2022. (3 marks)

Show formula, calculation and a concluding statement in your response.

c) Joe hired an experienced stock analyst, who advised Joe that based on his advanced modelling, the expected return and standard deviation for USA Ltd are at 7.50% and 45.00%, respectively. Using these new variables, detail the range of returns expected by investing in USA Ltd. at the 68% (one standard deviation) and 95% (two standard deviations) confidence levels.

Show variables, calculation and a concluding statement in your response. (2 marks)

d) Joe is considering investing all his savings in buying shares in USA Ltd. Explain to Joe why he should not do this by referring to the risk/return trade-off and what action Joe can take to reduce some of the risk. (3 marks)

e) The beta value for USA is 1.9. Explain what this number means. Include in your answer two differences between the standard deviation and beta. (2 marks)