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There are two stocks in the market, Stock A and Stock B. The price of Stock A today is $68. The price of Stock A

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There are two stocks in the market, Stock A and Stock B. The price of Stock A today is $68. The price of Stock A next year will be $57 if the economy is in a recession, $80 if the economy is normal, and $90 if the economy is expanding. The probabilities of recession, normal times, and expansion are .13,.67, and .20 , respectively. Stock A pays no dividends and has a correlation of .63 with the market portfolio. Stock B has an expected return of 16.7 percent, a standard deviation of 33.3 percent, a correlation with the market portfolio of .17, and a correlation with Stock A of .29. The market portfolio has a standard deviation of 17.3 percent. Assume the CAPM holds. a-1. What is the return for each state of the economy for Stock A? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a- What is the expected return of Stock A? (Do not round intermedlate calculations 2. and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. What is the variance of Stock A? (Do not round Intermediate calculations and round 3. your answer to 4 decimal places, e.g.. 1616.) a- What is the standard deviation of Stock A ? (Do not round intermediate calculations 4. and enter your answer as a percent rounded to 2 decimal places, e.9., 32.16.) a- What is the beta of Stock A? (Do not round Intermediate calculations and round 5. your answer to 3 decimal places, e.g., 32.161.) a- What is the beta of Stock B? (Do not round Intermediate calculations and round 6. your answer to 3 decimal places, e.g., 32.161.) b- What is the expected return of a portfolio consisting of 65 percent of Stock A and 35 1. percent of Stock B? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b- What is the standard deviation of a portfolio consisting of 65 percent of Stock A and 2. 35 percent of Stock B? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the beta of the portfolio in part (b)? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

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