The annual rate of return and related probabilities given below summarise your analysis for two securities.

Security A		Security B
Rate of Return	Probability	Rate of Return	Probability
10%	45%	5%	30%
14%	35%	15%	30%
18%	20%	25%	40%

Required:

a. Calculate the expected rate of return, E(R), for each security. (2 marks) b. Calculate the standard deviation, , for each security. (3 marks) c. Which security should you purchase? Explain why you make such choice. (2 marks) d. Imagine that you will make a portfolio that consists of 30% of Security A and 70% of Security B, assuming the covariance between A and B (_A,B) is -0.0026. Based on the answer you obtain from a) and b), calculate the expected return, E(R_P), and standard deviation, _P, of your portfolio. (5 marks)