State of Economy	Probability of State of Economy	Rate of Return If State Occurs
		Stock K	Stock M
Boom	0.10	25%	18%
Growth	0.20	10%	20%
Normal	0.50	15%	4%
Recession	0.20	-12%	0%

1. An individual plans to invest $5,000: $3,000 in Stock K and $2,000 in Stock M. What are the stock weights for this portfolio? (w_K = 60%, w_M = 40%)
2. Using the weights computed in Part a, what is the expected return for the portfolio? (E(R_p) = 8.88%)
3. Using the weights computed in Part a, calculate the variance and standard deviation of the portfolio. (_p = 0.7618% , _p = 8.73%)

PLEASE show your work by hand (no excel)