Question 1:

You have $35,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 16 percent and Stock Y with an expected return of 6 percent.

Required:

(a)	If your goal is to create a portfolio with an expected return of 11.5 percent, how much money will you invest in Stock X?
	(Click to select)$18,288$20,213$40,250$19,250$20,020

(b)	If your goal is to create a portfolio with an expected return of 11.5 percent, how much money will you invest in Stock Y?
	(Click to select)$14,963$15,750$16,380$15,120$16,538

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Question 2:

Consider the following information:

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B
Recession	0.10	0.06	-0.17
Normal	0.50	0.09	0.16
Boom	0.40	0.12	0.33

Required:

(a)	Calculate the expected return for Stock A. (Do not round your intermediate calculations.)
	(Click to select)9.90%8.52%11.64%10.70%9.05%

(b)	Calculate the expected return for Stock B. (Do not round your intermediate calculations.)
	(Click to select)19.50%10.67%21.48%18.52%20.28%

(c)	Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)
	(Click to select)1.92%1.36%2.02%1.82%2.00%

(d)	Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)
	(Click to select)14.57%10.30%16.30%13.84%15.15%