Question 5 (5 Marks) You has invested $125,000 in Stock A and $75,000 in Stock B Assume the Economy can have three states: Recession, moderate growth and strong growth The probabilities for each state and the returns of two Stocks are given in the table below: State of the Economy Probability of Occurrence Stock A Recession 25% -5% Moderate Growth 40% 5% Strong Growth 35% 20% Note: 0 If your answer is in percentage points, round to two decimal points. If your answer is in decimals, round to four decimal points. O Calculate the expected return for each stock separately. A. Stock A: Stock B: B. Calculate the standard deviation of each stock separately. Stock A: Stock B: C. Based on the information given and/or your findings above, explain which stock is a better investment. Why? D. Calculate the expected return of a portfolio consisting of these two stocks. Stock B 1% 10% 15%