Question: Financial management (please give a correct answer without using chat gpt) Using the information contained in the table below, answer the questions in the issue.

Financial management (please give a correct answer without using chat gpt)

Using the information contained in the table below, answer the questions in the issue.

Probability associated with each state Rate yield of title A Rate yield of title B
Period of recession 0.3 -15% 20%
Period normal 0.1 20% 30%
Period of prosperity ? 60% 40%

1. What are the expected returns and standard deviations of securities A and B?

2. Let's assume you have a total of $400,000. If you invest $100,000 in stock B and the rest in stock A.

a) What would be the expected return on the portfolio?

b) Determine the standard deviation of the portfolio.

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