Question 1 Suppose you have invested in only two stocks, A and B. You expect that returns on the stocks depend on the following three states of economy, which are equally likely to happen. Return on stock A (%) Return on stock B (%) State of economy 3 -5 Bear 8 11 Normal 13 Bull 27 i. Calculate the expected return on each stock ii. Calculate the standard deviation on returns on each stock iv. Calculate the covariance and correlation between the two stocks Calculate the expected return of a portfolio consisting of 50% of stock A and 50% of stock B Calculate the variance and standard deviation of a portfolio consisting of 50% of stock A and 50% of stock B [Marks: 15]