Question 5 (-1000 words) The table below gives information on the returns to three stocks that are dependent on the future rate of unemployment: Unemployment Low Average High Probability 0.10 0.50 0.40 Stock A 15% 25% 30% Stock B 40% 15% -5% Stock C -20% 1% 61% Current Share Price Beta 4.00 0.6 6.00 -0.6 10.00 1.2 In addition to the above stocks, investors also have access to a riskless asset which guarantees an annual return of 5%. a) What is the expected return for Stock A? (2 marks) b) What is the standard deviation for Stock B? (3 marks) c) An investor creates a portfolio by buying 5 shares of each of Stock A, B and C. What is the expected return and standard deviation of this portfolio? (4 marks) d) Explain and discuss the three different attitudes to risk that an investor can theoretical have (4 marks) e) Discuss in detail each of the following terms: i. The efficient frontier ii. The market risk premium iii. Systematic risk iv. Diversification (12 marks) END