1. Suppose you expect following three states of economy for stocks A to E in the next year. The bad state will occur with the probability of 0.2 and the good state will come with the probability of 0.1. Stock A B D E Bad 0.03 -0.05 0.08 0.27 0.01 Normal 0.21 0.09 0.15 0.12 0.07 Good 0.39 0.24 0.19 0.04 0.15 Investment $3,750 $10,000 $5,000 $2,500 $3,750 B 1.30 1.20 0.70 -0.75 0.84 a. What are the expected returns of stocks A to E? b. What are the variance and standard deviation for each stock? c. If you make investment in each stock as shown in the table, what are your portfolio weights in each security? d. What would be your portfolio expected return? e. What would be your portfolio standard deviation? f. Order the stocks in your portfolio by their total risk. g. Order the stocks in your portfolio by their systematic risk. h. If the market expected return is 14% and the risk-free rate is 4%, what should be the required return of each stock using CAPM model