5. Your firm is considering a new project. Based on potential economic conditions, you determined the following states, probabilities, and potential returns could occur. Economic State 1 2 3 Probability of State 0.20 0.30 0.50 Return -25% 10% 32% What are the expected return and standard deviation of returns of the project? 6. A portfolio is entirely invested in Darren's Janitorial Services, which is expected to return a handsome 18 percent and Brenza & Sons Accounting bonds which are expected to return a measly 6 percent. Three quarters of the funds are invested in Darren and the rest in Brenza. What is the expected return on the portfolio? a. 12% b. 15% c. 18% d. 2% e. I need more information 7. Suppose you have a portfolio comprised of two securities. You have 30 shares of the first security, at a cost of $12 per share and 18 shares of the second security at a cost of $10 per share. What is the weight of the second security in the portfolio? a. .18 b. .33 c .60 d. .67 e. .83 8. The is the excess return required from an investment in a risky asset over a risk-free investment. a. Risk-free rate b. Market rate c. Risk premium d. Real rate e. Holding-period return