Pelonomi has approached you as an investment manager and would like to invest in either of two securities X or Y. The required rates of return under different economic conditions are as follows:

State of economy	Boom	Normal	Recession
Probability of occurrences	0.35	0.50	0.15
Rate of return on stock X (%)	20	30	40
Rate of return on stock Y (%)	40	30	20

Required:

Compute the expected return and standard deviation for Stocks X and Y (13 marks)

Based on your answers advise Pelonomi on the stock to choose, supporting your answer with reasons.