You are considering investing in a stock that is currently selling for $10. You estimate the following probabilities and outcomes for the stock for the coming year:

Outcome	Probability	Price	Dividend
Mild recession	10%	$8	$0
Normal	20%	$10	$2
Strong economy	30%	$11	$2
Boom	40%	$12	$2.50

1) What is your expected return over the next year? (hint: find the weighted average of your holding period returns, and dont forget your dividends)

2)You are also considering investing in a bond that earns 6% in a mild recession, 5.5% in normal, 4% in strong economy, and 2% in a boom. Assume the same probabilities for each scenario as are given above. The expected return of the bonds returns is 3.7%, and the standard deviation is 1.54%. What is the correlation between the stock and bonds returns? (hint: you will need to solve for the standard deviation of the stocks returns.)