Ndilo Question 3 - (25 Marks) The current stock prices of company X and Y are both $10 and $15 respectively. The two stocks will have the following prices one year from now, conditional on the state of the economy: State of Economy Probability Price of Stock X Price of Stock Y Boom 0.50 $12 $17.25 Recovery 0.25 $10.50 $16 Recession 0.25 $9 ? Part A . Compute the expected return and variance of stock X. Part B Suppose the expected return on stock Y is 5%, what is the price of stock Y in the recession state? What is the variance of stock Y and its covariance with stock X? Part C What are the weights of stocks X and Y in the minimum variance portfolio? Compute the resulting minimum variance. What is the expected return of this portfolio? Part D . Calculate the Sharpe Ratios for the Minimum Variance Portfolio, Stock X and Stock Y. Assume the risk-free rate is 0%