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4. Currently you hold two stocks in your portfolio. The historical and future prices are as follows. Assume there are three possible states in the

4. Currently you hold two stocks in your portfolio. The historical and future prices are as follows. Assume there are three possible states in the future, and they will occur with equal probability. Stock Future Price Purchase Price Current Price Bad Normal Good A 35 42 35 45 50 B SO 20 5 20 30 (1) What are the expected returns of the two stocks from now to the future? Use the current price and future price in the expected return calculation. (2pts) U(x) = {2018-1 (2) Suppose the utility derive from trading is -e-0.1x + 1 x > 0 x

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