conomic State	Probability	B	C	D
Very poor	0.1	30%	-25%	15%
Poor	0.2	20%	-5%	10%
Average	0.4	10%	15%	0%
Good	0.2	0%	35%	25%
Very good	0.1	-10%	55%	35%

a. Based on the table above, construct an equal-weighted (50/50) portfolio of Investments B and C. What is the expected rate of return and standard deviation of the portfolio?

b. Now construct an equal-weighted (50/50) portfolio of Investments B and D. What is the expected rate of return and standard deviation of the portfolio?

Part A:

E(R) for BC portfolio: Note: format answer is 12.3%

SD for BC portfolio: Note: format answer is 1.2%

Part B:

E(R) for BD portfolio: Note: format answer is 12.3%

SD for BD portfolio: Note: format answer is 1.2%