probability of the state of economic	Rate of return STOCK A	if states STOCK B	occurs STOCK C
boom	0,2	0,4	-0,04	0,12
good	0,3	0,2	0,05	0,08
poor	0,4	0,04	0,1	0,02
burst	0,1	-0,06	0,14	0

Calculate the expected return of each stock. b. Calculate the variance and standard deviation of each stock. c. Calculate the expected return of the portfolio (Portfolio1) consisting 40% of stock A, 40% of stock B and 20% of stock C. d. Calculate the variance and standard deviation of this portfolio. e. Consider an alternative portfolio (Portfolio2) 40% of stock A, 20% of stock B, 10% of stock C and 30% in the risk-free asset. Risk-free asset expected return is 2%. What is this portfolios expected return, variance and standard deviation? f. Based on CAPM calculate each stock beta if market risk premium is 5%. g. Which stock has the lowest systematic risk? Which stock has the lowest total risk? Which stock is safest? Explain. h. What is the beta of the Portfolio1 and Portfolio?