$($Estimated time allowance: $17$ minutes$)$ Use the following information to answer the two questions below.

State of Prob. of the Rate of return if state occurs

the economy state of economy Stock A Stock B

Boom $0\mathrm{.}600\mathrm{.}150\mathrm{.}04$

Bust $0\mathrm{.}400\mathrm{.}050\mathrm{.}04$

Excel file here

You MUST use $4$ digits in every calculation you do in order for your answer to be the same as the one in the system. Enter answer using $4$ decimals. Do not use or enter the $\%.$ For example, if your answer is $3\mathrm{.}48\%$ enter $0\mathrm{.}035$; if your answer is $0\mathrm{.}12013$ then enter $0\mathrm{.}1201$

What is the expected return of a portfolio with $20\%$ in stock A and $80\%$ in stock B$?$

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What is the variance of the portfolio with $20\%$ in stock A and $80\%$ in stock B$?$

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