You have been given this probability distribution for the holding-period return for ABC stock:

State of Economy Probability HPR Boom 0.25 25% Average 0.50 10% Recession 0.25 -10% (a) What is the expected holding-period return for ABC stock?

(b) What is the expected standard deviation for ABC stock?

(c) What is the expected variance for ABC stock?

(d) If the risk-free asset return was 3%, and the actual standard deviation of the portfolio's excess returns was 25%, what is the Sharpe ratio?

(e) If the actual return of ABC stock is 10%, what is the alpha? Should you buy or sell? Please explain.