QUESTION 1

1. 1. EXPECTED RETURN: A stocks returns have the following distribution:

   Economy Probability of This Economy Occurring Rate of Return if This Economy Occurs

   Weak 0.1 -30%

   Below average 0.1 -14%

   Average 0.3 11%

   Above average 0.3 20%

   Strong 0.2 45%

   1.0

   The stocks expected return is

   		a. 13.50%
   		b. 13.70%
   		c. 13.80%
   		d. 13.90%
   		e. 13.97%

QUESTION 2

1. 2. From problem 1, what is the standard deviation?

   		a. 17.54%
   		b. 21.86%
   		c. 23.71%
   		d. 26.93%
   		e. 28.19%