Use the following table of States of the Economy and Stock Returns to answer the following questions.

State of Probability of Security Returns if State Occurs

Economy State of Economy A B

Recession .25 -15% 10%

Average .50 12% 5%

Prosperity .25 30% 15%

1.0

Calculate the Expected Return for A & B.

Calculate the Standard Deviation for A & B.

Calculate the expected Return on a portfolio of 50% Security A & 50% Security B.

Calculate the Standard Deviation for the Portfolio A & B.