Problem 1: The following probability distribution is given for retums of Stock X Market Condition Probability Stock X Good 0.3 40% Average 0.5 20% Poor 0.2 -10% (a) Calculate the expected return of Stock X (b) Calculate the standard deviation of returns of Stock X Problem 2: Given the following probability distributions: Market Condition Probability Stock A Stock B High Growth Average Low Growth Poor 0.3 0.5 0.1 0.1 40% 20% 5% -15% 30% 15% -5% 0% 1) 1) A portfolio is formed by investing 50% of the funds in Stock A and 50% in Stock B; (A) Calculate the expected return on the portfolio. (B) Calculate the standard deviation of the portfolio. II) A portfolio is formed by investing 65% of the funds in Stock A and 35% in Stock B; (C) Calculate the expected return on the portfolio. (D) Calculate the standard deviation of the portfolio. Problem 3: Given the following historical data: Year Stock A Returns Stock B Returns 2016 11.30% 12.71% 2017 -9.10% 24.00% 2018 23.30% -6.8% 2019 2.20% 26.20% 2020 16.00% 14.52% 1) 11) Calculate the average returns and the standard deviation of returns for each stock. (Stock A and Stock B) Calculate the average returns and the standard deviation of returns for a portfolio where 60% of the funds are invested in Stock A and 40% in Stock B Calculate the average returns and the standard deviation of returns for a portfolio where 35% of the funds are invested in Stock A and 65% in Stock B