Q8. You've just decided upon your capital allocation for the next year, when you realize that you've underestimated both the expected retln'n and the standard deviation of your risky portfolio by 4%. 'Will you increase, decrease, or leave unchanged your allocation to risk-free T-bills? Q9. Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.3 44% Normal growth 0.4 14% Recession 0.3 46% Please compute the mean and standard deviation of the HPR on stocks. Q10. The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-ofyear price depend on the state of the economy by the end of the year as follows: Dividend Stock Price Boom $2.00 $50 Normal economy 1.00 43 Recession .50 34 (1. Calculate the expected holding-period return and standard deviation of the holding period return. All three scenarios are equally likely. b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 4%