QUESTION 3 (25 MARKS) a) You are considering investing in a project with the following possible outcomes: States Probability of Investment Occurrence Returns A 18% 20% 42% 16% 30% 3% Investment Return B -15% State 1: Economic boom State 2: Economic growth State 3: Economic decline State 4: Economic in depression 5% 12% 10% -25% 18% Calculate the expected rate of return and standard deviation of returns for these investments, respectively. (20 marks) b) You are thinking of adding one of two investments to an already well-diversified portfolio. Security A Expected Return = 14% Standard Deviation of Returns = 16% Beta = 1.2 Security B Expected Return = 16% Standard Deviation of Returns = 20% Beta = 1.2 If you are a risk-averse investor, justify which one is the better choice