Mr. Lachance wants to invest $50,000 and asks you to help him find the best investment. You have gathered information on the returns of the following two securities.

Snarius	Probabilits	Title A	Title B
Expansion	0.30	100 %	40 %
In the state in which	0.40	15 %	15 %
Rcession	0.30	-70 %	-10 %

1. Calculate the expected return and risk of the two securities. So what title do you recommend?

2. Then calculate the correlation between the returns of the two securities. Do you advise Mr. Lachance to include both securities in the same portfolio? For what ?

3. If Mr. Lachance still decides to invest $30,000 in security A and $20,000 in security B, how much will the expected return and the risk of his portfolio be?