1.

There is a 12.80% probability of a below average economy and a 87.20% probability of an average economy. If there is a below average economy stocks A and B will have returns of -3.00% and 12.10%, respectively. If there is an average economy stocks A and B will have returns of 17.70% and -5.10%, respectively. Compute the: a) Expected Return for Stock A:

b) Expected Return for Stock B:

c) Standard Deviation for Stock A:

d) Standard Deviation for Stock B:

2.

There is a 17.20% probability of an average economy and a 82.80% probability of an above average economy. You invest 41.80% of your money in Stock S and 58.20% of your money in Stock T. In an average economy the expected returns for Stock S and Stock T are 10.40% and 14.00%, respectively. In an above average economy the the expected returns for Stock S and T are 23.90% and 27.20%, respectively. What is the expected return for this two stock portfolio?

3.

You are invested 38.90% in growth stocks with a beta of 1.62, 28.90% in value stocks with a beta of 1.24, and 32.20% in the market portfolio. What is the beta of your portfolio?