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Problem 2 (20 points) Beta Stock A B Number of shares 750 220 Stock Price 33 1.2 0.8 460 1.6 Economic condition Probability Boom 20%

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Problem 2 (20 points) Beta Stock A B Number of shares 750 220 Stock Price 33 1.2 0.8 460 1.6 Economic condition Probability Boom 20% 22% 20% 50% Normal 15% 10% 12% Recession 30% 5% T% 1. What is the expected return and standard deviation on this portfolio? 2. What is the portfolio beta? What is the expected return on the market if 3. If you want to increase the return on your portfolio by 10% and increase its beta t 12% What should be the weight of Stock C

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