PORTFOLIO THEORY 27. Explain the term Portfolio 28. Suppose financial analysts believe that there are four equally likely states of the economy: depression, recession, normal, and boom. The returns on the Allos Inc. are expected to follow the economy closely, while the retums on the Orangus Inc. are not. The return predictions are as follows: of States economy the Allos Inc. Returns Orangus Inc. Returns (RA) (RB) Depression -20% 5% Recession 10% 20% Normal 30% -12% Boom 50% 9% Required: A. For each company calculate: i, the expected returns ii.the Variance iii.the Standard deviation B. Calculate and explain: iv.The covariance between both companies) V. The correlation (between both companies)