Question: 4.1 You are given the following data regarding the returns on stocks A and B. Scenario Probability Return on Stock A Returns on Stock B

4.1 You are given the following data regarding the returns on stocks A and B.

Scenario Probability Return on Stock A Returns on Stock B
Severe Recession 0.25 -0.40 0.12
Mild Recession 0.10 0.15 0.06
Normal Growth 0.30 0.20 0.01
Boom 0.35 0.50 -0.03

What is the expected return and standard deviation of a portfolio that is formed by holding 30% in stock A and the remainder in stock B?

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