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4. Consider the following information: Probability of State of Economy State of Economy Inflationary 0.60 Recession 0.40 Rate of Return if State Occurs Stock A

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4. Consider the following information: Probability of State of Economy State of Economy Inflationary 0.60 Recession 0.40 Rate of Return if State Occurs Stock A Stock B Stock C 0.18 0.04 0.31 0.03 0.16 -0.11 Required: a. What is the expected return on a portfolio invested 20% each in Stock A and Stock B and 60% in Stock C? b. What is the variance and standard deviation of the portfolio? (25 POINTS)

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