Expected Return and Standard Deviation / This problem will give you some practice calculating measures of prospective portfolio performance. There are two assets and three states of the economy

State of Economy	Probability of State of Economy	Rate of Return If State Occurs
		Stock A	Stock B
Recession	.20	-.15	.20
Normal	.50	.20	.30
Boom	.30	.60	.40

Expected Returns :

Stock A = (.20 * -.15) + (0.50 * .20) + (.30 * .60) = .25

Stock B = (.20 * .20) + (.50 * .30) + (.30 * .40) = .31

Standard Deviation :

Stock A = .20 * (-.15 - .25)^2 + .50 * (.20 - .25)^2 + .30 * (.60 - .25)^2 = 0.07

0.07 = .2646, 26.46%

Stock B = .20 * (.20 - .31)^2 + .50 * (.30 - .31)^2 + .30 * (.40 - .31)^2 = 0.0049

0.0049 = .07, 7%

Portfolio Risk and Return / Using the information in the precious problem, suppose you have $20,000 total. If you put $15,000 in Stock A and the remainder in Stock B. what will be the expected return and standard deviation of your portfolio?