You are considering the following two stocks to form a portfolio: STK and VZN. The beginning-of-year price of STK is $50 and the price of VZN is $40. Their dividend payments and end-of-year prices depend on the market condition by the end of the year.The current risk-free rate is 2%.

Market Condition Bull Bear Probability 0.6 0.4 STK Stock Price Dividend $5 $70 $3 $42 VZN Stock Price Dividend $2 $34 $4 $50 (a). Calculate the expected return on STK and VZN. (b). Calculate the variance and standard deviation of STK and VZN.