2. (This question is not cumulative) Please keep 4 digits in your calculations of standard deviations as decimals. [18 marks) a) The returns of the mutual fund you invested in the past five years were: 15%, -10%, 4%, 12%, -8%. What were the arithmetic and geometric average returns? Which average return do you actually earn on your mutual fund investment? b) The expected return for a stock depends on the state of the economy as follows: State Probability Return Good 0.4 40% Normal 0.4 10% Bad 0.2 -20% What is the expected return and standard deviation for this stock? c) You have decided to invest in only two stocks, X and Y. Stock X has an expected return of 15% and a standard deviation of 24%. Stock Y has an expected return of 8% and a standard deviation of 16%. The correlation coefficient between these two stocks is 0.1. What is your expected return and standard deviation of your portfolio if you allocate seventy percent of your money to stock X and the rest in stock Y