Question 2: In the following, the probabilities of the different states of the economy and the associated rate of return for each state are given. (3.5 Marks)

State of Economy	Probability of State of Economy (P)	Rate of Return (r)
Recession	0.3	- 12%
Most likely	0.5	6%
Boom	0.2	11%

1. Calculate the expected rate of return (1 mark)
2. Calculate the variance (2 marks)
3. Calculate the standard deviation (0.5 marks)