You may use Excel or Maxima to do the calculations and you may include a printed version of a spreadsheet solution to justify your answers. Please keep a copy of your completed assignment. Before doing this assignment, please complete lesson 2 and lesson 3 (Luenberger, chapters 6 and 7). Question 1 A financial analyst has developed the following data about the state of the economy and the returns of two securities: State of the Probability economy Stock X Rate of return Stock Y Good 25% 20% 16% Average 50% 14% 12% Poor 25% -8% -8% 1.1 Determine the expected rates of return and the standard deviations for stock X and stock Y. 1.2 Determine the covariance between the returns for stock X and stock Y. 1.3 Consider a portfolio Q that consists of stock X and stock Y. Let a represents the proportion of wealth invested in stock X. Express the expected rate of return and the standard deviation of the portfolio Q in terms of a. 1.4 Suppose that a = 0; 0.1;0.2;...; 1 and determine the expected rate of return and the standard deviation of the portfolio Q for each value of a. Tabulate the values in a table with the following headings: Weight Return Standard deviation TQ 1.5 Illustrate the relationship between the expected return FQ and standard deviation o of the portfolio Q by means of an ro versus q diagram. 2