Q1. Supposed you are an investor who falls in the 35% tax bracket (federal and state taxes combined). You have a lower risk appetite and have decided that government bonds are the best fit for you. You are considering investing in either the 10-year Treasury Note that currently yields 4.2% or a 10 -year municipal bond fund that is expected to yield around 2.8%. As a rational investor, which one would you pick and why? What are some considerations that went into your decision? ( 3 points) Q2. Which would you argue makes more sense when evaluating the risk of a portfolio or a stock - variance or standard deviation? Why? (2 points) Q3. An analyst estimates that stock X and stock Y have the following probabilities of return depending on the state of the economy. Given the information in the table below calculate the following: (10 points) 1. The expected return of stock X 2. The expected return of stock Y 3. The standard deviation of returns of Stock X 4. The standard deviation of returns of Stock Y 5. The correlation between Stock X and Stock Y Q4. Suppose you wish to form a portfolio that invests 30% in Stock X and 70% in Stock Y from Question 3. Answer the following: (5 points) 1. What is the expected return of this portfolio? 2. What is the standard deviation of this portfolio? Q1. Supposed you are an investor who falls in the 35% tax bracket (federal and state taxes combined). You have a lower risk appetite and have decided that government bonds are the best fit for you. You are considering investing in either the 10-year Treasury Note that currently yields 4.2% or a 10 -year municipal bond fund that is expected to yield around 2.8%. As a rational investor, which one would you pick and why? What are some considerations that went into your decision? ( 3 points) Q2. Which would you argue makes more sense when evaluating the risk of a portfolio or a stock - variance or standard deviation? Why? (2 points) Q3. An analyst estimates that stock X and stock Y have the following probabilities of return depending on the state of the economy. Given the information in the table below calculate the following: (10 points) 1. The expected return of stock X 2. The expected return of stock Y 3. The standard deviation of returns of Stock X 4. The standard deviation of returns of Stock Y 5. The correlation between Stock X and Stock Y Q4. Suppose you wish to form a portfolio that invests 30% in Stock X and 70% in Stock Y from Question 3. Answer the following: (5 points) 1. What is the expected return of this portfolio? 2. What is the standard deviation of this portfolio