Question 6 (Total 20 marks): You have the following information about the return on stock S and on the market portfolio: State of the economy Recession Normal Boom Probability of State 0.20 0.50 0.30 Rate of Return on Stock S (%) -2 14 24 Rate of Return on Market Portfolio (%) 6 10 12 a) Calculate the expected return and standard deviation of Stock S. b) Calculate the expected return and standard deviation of the market portfolio. c) Calculate the covariance between the returns on Stock S and on the market portfolio. d) Calculate the beta coefficient of Stock S e) Is Stock S over-priced or under-priced if we know that the Securities Market Line is given by the equation R = 7%+2.8%