You are trying to set up a portfolio that consists of a corporate bond fund and a

common stock fund. The following information about the annual return $($per

$$1,000)$ of each of these investments under different economic conditions is

available along with the probability that each of these economic conditions will

occur.

Probability State of the Economy Corporate Bonds Common Stocks

$\mathrm{.}10$ Recession $-$$$50-$$$100$

$\mathrm{.}15$ Stagnation $40-45$

$\mathrm{.}35$ Slow growth $5090$

$\mathrm{.}30$ Moderate growth $7080$

$\mathrm{.}10$ High growth $90130$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Compute the

$($a$)$ Expected return for corporate Bonds.

$($b$)$ Standard deviation for corporate Bonds.

$($c$)$ Expected return for common stocks

$($d$)$ Standard deviation for common stocks

$($e$)$ Would you invest in corporate bonds or common stocks? Why?