22. Expected return and standard deviation. Use the information in the following to answer the questions below. m Economy of State State State State Boom .15 0.00 0.230 0.450 Growth .25 0.00 0.140 0.275 Stagnant .35 0.00 0.070 0.025 Recession .25 0.00 0.035 0. 175 1What is the expected return of each asset? What are the variances and standard deviations of each asset? What is the expected return of a portfolio with equal investment in all three assets? What is the portfolio's variance and standard deviation using the same asset weights in part c? on .cre 27. Beta of a portfolio. The beta of four stocksP, Q R, and Sare respectively 0.6. 0.85, 1.2, and 1.35. What is the beta of a portfolio with the following weights in each asset? Weight in P Weight in Q Weight in R Weight in S Portfolio 1 25% 25% 25% 25% Portfolio 2 30% 40% 20% 10% Portfolio 3 10% 20% 40% 30% 29. Changing risk level. Mr. Malone wants to change the overall risk of his portfolio. Currently his portfolio is a combination of risky assets with a beta of 1.25 and an expected return of 14%. Mr. Malone will add a riskfree asset (U.S. Treasury bill) to his portfolio. If he wants a beta of 1.0, what percent of his wealth should be in the risky portfolio and what percent should be in the riskfree asset? If he wants a beta of 0.75? If he wants a beta of 0.50? If he wants a beta of 0.25? Is there a pattern here? 33. Different investor weights. Two risky portfolios exist for investing: one is a bond portfolio with a beta of 0.5 and an expected return of 8%, and the other is an equity portfolio with a beta of 1.2 and an expected return of 15%. If these portfolios are the only two available assets for investing, what combination of these two assets will give the following investors their desired level of expected return? What are the betas of each investor's combination of the bond and equity portfolio? a. Bart: desired expected return 14% b. Lisa: desired expected return 12% c. Maggie: desired expected return 10%