Question 2 Mr. Ferguson also wants to invest in two stocks, stock Alu and Babu and has been provided the following information on the stocks. Use the information to answer the questions that follow: State of Economy Probability of State of Economy Rate of Return on stock Alu Rate of Return on stock Babu Recession 0.10 5% -10% Normal 0.60 9% 12% Boom 0.30 10% 20% a) What is the expected return on stock Alu and stock Babu? (6 marks) b) What is the variance and standard deviation for stock Alu and stock Babu? (10 marks) c) Differentiate between systematic risk and firm specific risk (4 marks)