1. Calculate the expected return and standard deviation for a portfolio consisting of 30% in Ant Ltd(70% for Belle) and the remainder in Bell Ltd.

How do I get 15.6% and 26.20% ????

State of Rate of return Rate of return Portfolio Probability of state economy Ant Ltd Bell Ltd Return Recession 15% 2% x.3 -30% x.7 2% x 30% + - 30%+ 70% = -20.4 Normal 55% 10% 18% HOW??? 15.6% 15% 31% HOW???? 26.20% Boom 30% 100 - - (55+15) = 30% 1) E(R)= 15% x (2% x 30% +-30% x 70%) = 15% x-0.204 (-20.4%) = -0.0306 2) -0.0306 x (55%x 15.6%) + (30% x 26.20%) = 0.1338