Your friend wants to invest $50,000 and asks you to help him find the best investment. You have gathered information on the returns of the following two securities.

Scenario	Probability	Security A	Security B
Expansion	0.3	100%	40%
Status quo	0.4	15%	15%
Recession	0.3	-70%	-10%

1. Calculate the expected return and risk of the two securities. Which security do you recommend? 2. Then calculate the correlation between the returns of the two securities. Do you advise your friend to include both securities in the same portfolio? Why would he do so? 3. If your friend still decides to invest $30,000 in stock A and $20,000 in stock B, what will be the expected return and risk of his portfolio?