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Stock S is expected to return 12 percent in a boom, 9 percent in a normal economy, and 2 percent in a recession. Stock T
Stock S is expected to return 12 percent in a boom, 9 percent in a normal economy, and 2 percent in a recession. Stock T is expected to return 4 percent in a boom, 6 percent in a normal economy, and 9 percent in a recession. The probability of a boom is 31 percent, while the probability of a recession is 25 percent. What is the standard deviation of a portfolio that is comprised of $4,500 of Stock S and $3,000 of Stock T?
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