Question: Calculating Returns and Standard Deviations. Based on the following information, State of Econony Probablility of the State of Rate of Return if State Stock A

Calculating Returns and Standard Deviations. Based on the following information,

State of Econony Probablility of the State of Rate of Return if State
Stock A Stock B
Recession 0.15 0.02 -0.3
Normal 0.55 0.1 0.18
Boom 0.3 0.15 0.31

a. Calculate the expected return and standard deviation for the two stocks.

b. Your portfolio is invested 30 percent each in A and 60 percent in B. What is the expected return of the portfolio?

c. What is the variance of this portfolio? The standard deviation?

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