Korn, Inc. and Bunyon, Inc. are two foot care firms whose stock returns

depend on the following four states of the economy, which are equally

likely to happen:

(answer parts a, b, and c)

Korn Bunyon

Recession -10 +25

Slow Go +2 +5

Normal +6 +3

Boom +25 -15

a.) Calculate the expected return on each stock individually.

b.) Calculate the variance and standard deviation of each stock

individually.

c.) Then calculate the expected return, variance and standard

deviation of a portfolio consisting of 80% Korn and 20% Bunyon.