State Probability r_A r_M

1 20% 15% 12%

2 30% 8% 6%

3 30% 4% 1%

4 20% -6% -2%

1. Calculate the expected returns on security A and the market.

2. Calculate the variances and the standard deviations of security A and the market.

3. Calculate the coefficient of variation (CV) for security A and the market. Does A initially seem to be more or less attractive than a market portfolio? Why? What other consideration might affect your answer and how?