You have done your research for the following investments and your friend has provided their expectations for the markets for next year.

State of Economy	Probability of State of Economy	Stock A	Stock B	TSX
Boom	.30	30%	-9%	18%
Normal	.40	16%	12%	10%
Recession	.30	-10%	20%	-10%

* Remember to show all of your work *

1. Calculate the beta of Stock A. (2 marks)
2. Calculate the beta of stock B. (2 marks)
3. Calculate the beta for the TSX. (2 marks)

Known:

the risk for stock A is 15.768%.

the risk for stock B is 11.67%.

the risk for TSX is 11.24%.

the covariance of return for stock A and B is -1.6464 and the correlation of return for stock A and B is 0.89.

the covariance of return for stock A and TSX is 1.7664 and the correlation of return for stock A and TSX is 0.997.

the covariance of return for stock B and TSX is -1.1244 and the correlation of return for stock B and TSX is -0.857.