part3) Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Recession . 17 .06 .17 Normal .50 .09 . 12 Boom ?? .14 .29

a. Calculate the expected return for Stocks A and B. b. Calculate the standard deviation for Stocks A and B.

part4) Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom ?? .06 .14 .34 Bust .44 .15 .05 .04

a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C?