The stock of Business Adventures sells for $40 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: (LO 5-2)

	Dividend	Stock Price
Boom	$2.00	$50
Normal economy	1.00	43
Recession	0.50	34

1. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely.

2. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 4%