XYZ ltd. is considering three possible capital projects for next year.Each project has a 1 year life, and project returns depend on next year's state of the economy.The estimated rates of return are shown below.

State of TheProbabilityRate of Return

Economyof OccurrenceABC

Recession0.2510%9%14%

Average0.50141312

BOOM0.25161810

REQUIRED:

a.Find each project expected rate of return, variance, standard deviation and coefficient of variation.

b.Compute the correlation coefficient between

i.A and B

ii.A and C

iii.B and C

c.Compute the expected return on a portfolio if the firm invests equal wealth on each asset.

d.Compute the standard deviation of the portfolio.