Question 3 (15 marks) You are considering to invest in Stock A and Stock B. The expected returns % of the stocks under different economic conditions are as follows: (a) Calculate the expected returns\% and standard deviation of Stock A and Stock B respectively. (8 marks) (b) (i) Based on your answer in (a), calculate the expected return\% of your portfolio if you invest 50% in both Stock A and Stock B. (2 marks) (ii) You know the correlation coefficient of Stock A and stock B is 0.4. If you invest 50% in both Stock A \& Stock B, calculate the standard deviation of your portfolio based on the standard deviation of Stock A and Stock B in (a). (3 marks) (iii) What does the result in (ii) tell you about the benefit of diversification? (2 marks)