You are an active investor in the securities market. You had established one investment portfolio 5 years ago. Required:

Your portfolio has provided the rates of return of 15.6%, 16.2%, - 7.6%, 17.3% and 17.4% over the past five years, respectively. Calculate the arithmetic average return of the portfolio for this period? (1 mark)

Assume that beta of the stock A in your portfolio is 1.5. The market risk premium on the stocks of the same industry are 8.5%. The current Treasury Bond has the rate of of return of 7%. Calculate the expected return of the stock using Capital Asset Pricing Model (CAPM) (2 marks)?

Supposing that the forecast on economic situation and returns of the portfolio will be as follows in next year, calculate the expected return, variance and standard deviation of the portfolio (4 marks)

State of economy	Probability	Rate of returns
Mild Recession	0.15	- 8%
Growth	0.50	15%
Strong Growth	0.35	20%