The returns on AA Berhad and BB Berhad are given below,

State of Economy	Probability of occurring	Return (%) AA Berhad	Return (%) BB Berhad
1	0.30	6	-15
2	0.50	10	18
3	0.20	17	40

Calculate:

1. Expected return E(R) for

1. AA Berhad

(4 marks)

2. BB Berhad

(4 marks)

2. Standard deviation for

1. AA Berhad

(5 marks)

2. BB Berhad

5. marks)

3. Discuss any FOUR (4) benefits of diversification by referring to AA and BB Berhad.