You know the following information about the possible return offered by the two stocks, Stock X and Stock Y next year . scenerio| Probability Return(x) Return Y

recession| 40% -5% -6%

normal | 60%. 10%. 14%

a. Calculate the expected return and variances for stock X, Stock Y

b from risk return point of view , which stock , X or Y is better investment , why?

c what is the correlation coefficient between returns on stock X and stock Y?

d. Calculate the expected returns and standard deviation for a portfolio consisting of 40% stock X and 60% of stock Y

E. IF i investment 80% of my money in this portfolio (40% in stock X and 60% in stock Y) and 20% of money in T-bills which offers a rate of return of 2%. What is the expected return and standard deviation of my investment portfolio ?