Question 3 (20 marks) You are considering investment in one or both of the two securities N and M, and Suppose the shares of two companies have the following probability distributions: Economy Probability Return N Return M Boom 0.3 20% 7% Growth 0.5 10% 20% Slump 0.2 0% -5% Required a. Calculate the expected return, variance and standard Deviation for each security separately. (6 marks) b. Calculate the expected return, variance and standard Deviation for the portfolio comprising 60% investment in N (10 marks) c. Outline the objectives of portfolio diversification, and explain in general terms why the risk on individual securities may differ from that of a portfolio as a whole. (4 marks)