Question: Below shows the expected returns for stock A and B in three possible states. State of the Economy Boom Normal Recession Probability 0.18 0.62 0.20

Below shows the expected returns for stock A and B in three possible states. State of the Economy Boom Normal Recession Probability 0.18 0.62 0.20 A 22% 14% -10.00% B 14% 8% 5.00% You have a portfolio which is comprised of 55 percent of stock A and 45 percent of stock B. Q: What is the expected rate of return on this portfolio? Q: What is the expected portfolio risk measured by standard deviation

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