Question 18 options:

Use the following information to answer the two questions below.

State of Prob. of the Rate of return if state occurs

the economy state of economy Stock A Stock B

Boom 0.70 0.15 0.02

Bust 0.30 0.05 0.02

You MUST use 4 digits in every calculation you do in order for your answer to be the same as the one in the system. When entering your answer, round to the nearest 0.01% but do not enter the % sign. For example, if your answer is 3.484% enter 3.48; if your answer is 0.12013 then enter 12.01

What is the expected return of a portfolio with 60% in asset A and 40% in Asset B?

What is the variance of the portfolio with 60% in asset A and 40% in Asset B?