Question 1 - Miller Trust Corporation is considering a portfolio with 60% weighting in a cyclical stock and 40% weighting in a countercyclical stock. It is expected that there will be four economic states: Excellent, Good, Average and Bad, each with equal probabilities of occurrence. The cyclical stock is expected to have returns of 25%, 5% and 1%, -2% in Excellent, Good, Average and Bad economies respectively. The countercyclical stock is expected to have returns of -10% -8%, 2% and 14% in Excellent, Good, Average and Bad economies respectively. Given this information, calculate (rounded to 4 decimal places):

a) expected return for the portfolio;

b) variance for the portfolio.