Use the data in the information sheet to answer this question.

What is the expected return of Campbell's Soup given the two economic states?

	A.	1.8%
	B.	2%
	C.	2.5%
	D.	4%

There are two stocks. One, Campbell Soup is a nice safe investment that generally provides a positive return. It does even better in a recession than in an economic boom, because soup is a cheap and simple meal. It has an expected return in boom times of 1% and an expected return in a recession of 4%. The other stock, Carnival Cruise Line does extremely well in economic booms when everyone is employed and has plenty of spending money and is taking cruises. However it does really poorly when there is a recession. It has an expected return in boom times of 20% and an expected return in a recession of 8%. You will need to calculate the expected return and standard deviation of each of these stocks. Assume that there is a 50% chance of a recession and a 50% chance of a boom. Now we will put them in a portfolio. We will have 60% of our portfolio be Campbell's Soup and the remaining 40% of the portfolio be Carnival Cruise Lines. Assuming that there is a 50% chance of a recession and a 50% chance of a boom, calculate the expected return and standard deviation of the portfolio