Your portfolio consists of $1000 invested in Company A and $4000 invested in Company B. Assume a 25% chance of a recession and predicted returns in each state of economy as shown below:

1.What are your portfolio weights for Company A and Company B?

2.What is your portfolios expected return?

3.What is your portfolios volatility?

State of Economy Probability of State of Economy Recession 60% Boom 40% Rate of Return if State Occurs Company A Company B -8% 15% 38% -2%