State Probability Bond Stock 2 Booming 20% 10% 25% Normal 50% 7% 10% Slowdown 10% 3% 2% Recession 20% -2% -10% 1. Calculate the expected return, standard deviation for stock and bond, calculate the covariance between the two. 2. Assume that you hold 50% of bond and 50% of stock, calculate the expected return and standard deviation of your portfolio