1. Use the following information to answer the questions below:

Security Return(S1) Return(S2)

A 16% 20%

B 12% 25%

Risk-free asset return = 4%

S1 is State-1 and S2 is State-2;

Prob(S1) = 0.6; Prob(S2) = 0.4

i). What is the expected return on Security A and the expected return on Security B?