There are three securities in the market. The following chart shows their possible payoffs.

Scenario	Probability of Outcome	Return on Security 1	Return on Security 2	Return on Security 3
1	0.1	0.25	0.25	0.10
2	0.15	0.20	0.15	0.15
3	0.35	0.15	0.20	0.20
4	0.4	0.10	0.10	0.25

What is the expected return and standard deviation for each security?

What are the co-variances and correlations between the pair of securities?

What is the expected return and standard deviation for a portfolio with half of its funds in stock 1, and the other half in stock 2?

What is the expected return and standard deviation for a portfolio with half of its funds in stock 1, and the other half in stock 3?

What is the expected return and standard deviation for a portfolio with half of its funds in stock 2, and the other half in stock 3?

What do your answers above imply about diversification?