Please

Please write legibly. For each of the problems, show all your work and clearly explain how you solve the problem. You should follow these rules to get credit for your work. Problem 1: Miss Maple is considering two securities, A and B, with the relevant information given below, State of the economy Probability Return on Security A (%) Return on Security B (%) Bear 0.4 3.00% 6.50% Bull 0.6 15.00% 6.50% a. Calculate the expected return and standard deviation of each of the two securities. b. Suppose Miss Maple invested $2,500 in security A and $3,500 in security B. Calculate the ex- pected return and standard deviation of the portfolio.Problem 2: Returns on the stock of First Boston and Midas Metals for the ears 2010-2013 are shown below. First Boston -1 8.00% 32-00% 18-00% 1.00% a. Compute the average annual return for each stock and a portfolio consisting of 50% First Bos- ton and 50% Midas. 1:. Compute the standard deviation for each stock and the portfolio. :3. Are the stocks positively or negatively con-elated and what is the effect on risk? Problem 3: The following table contains annual returns for the stocks of Home Depot (HD) and Lowe's (LOW). The returns are calculated using end-of-year prices (adjusted for dividends and stock splits) retrieved from finance.yahoo.com. Year HD 154) LOW 19% 3007 -52.6 -19.1 2003 40.0 48.0 2004 21.5 2006 16.1 2006 1,0 6.0 2007 31,7 -26.8 2008 -11,4 -3.3 2009 30 6 10.8 2010 249 2011 23.5 34 a. Use Excel to create a spreadsheet that calculates annual portfolio returns for an equally weighted portfolio of HD and LOW. b. Calculate the average annual return for both stocks and the portfolio. c. Calculate the standard deviation of annual returns for HD, LOW, and the equally weighted port- folio of HD and LOW. d. Calculates the correlation coefficient for HD and LOW annual returns. e. Create a table in Excel that calculates returns for portfolios comprised of HD and LOW using the following, respective, weightings: (1.0, 0.0), (0.9, 0.1), (0.8, 0.2), (0.7, 0.3), (0.6, 0.4), (0.5,0.5), (0.4, 0.6), (0.3, 0.7), (0.2, 0.8), (0.1, 0.9), and (0.0, 1.0). Also, calculate the portfolio standard deviation associated with each portfolio composition. You will need to use the stand- ard deviations found previously for HD and LOW and their correlation coefficient. f. Identify the weights associated to the portfolio of minimum variance g. Graph the relationship return / risk associated to each of the weights in (e). Note: I strongly recommend you work with decimal places or the decimal places formatted as percent- age in Excel. For example, in 2002, you should input in Excel "-0.526" and "-0.191"