5 . Calculating Expected Return [LO1] Based on the following information, calcu- late the expected return: Probability of Portfolio State of State of Return Economy Economy If State Occurs Recession .20 -.08 Boom 80 15 6. Calculating Expected Return [LO1] Based on the following information, calcu- late the expected return: Probability of Portfolio State of State of Return If State Economy Economy Occurs Recession 10 -.15 Normal .60 09 Boom .30 23 7. Calculating Returns and Standard Deviations [LO1] Based on the following infor- mation, calculate the expected return and standard deviation for Stock A and Stock B: State of Probability of Rate of Return If State Occurs Economy State of Economy Stock A Stock B Recession 10 04 -.17 Normal .60 .09 .12 Boom .30 .17 27 8. Calculating Expected Returns [LO1] A portfolio is invested 25 percent in Stock G, 55 percent in Stock J, and 20 percent in Stock K. The expected returns on these stocks are 1 1 percent, 9 percent, and 15 percent, respectively. What is the portfolio's expected return? How do you interpret your answer? 9. Returns and Variances [LO1] Consider the following information: State of Probability of Rate of Return If State Occurs Economy State of Economy Stock A Stock B Stock C Boom 75 08 17 24 Bust .25 11 -.05 -.08 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C