Problem 1 (45 marks) You have done your research for the following investments and your friend has provided their expectations for the markets for next year. Probability of State of State of Stock Stock Economy Economy A B TSX Boom .30 30% 9% 18% Normal .40 16% 12% 10% Recession .30 -10% 20% -10% * Remember to show all of your work * a. Calculate the expected return for stock A. (2 marks) b. Calculate the expected return for stock B. (2 marks) C. Calculate the expected return for the TSX. (2 marks) d. Calculate the risk for stock A. (2 marks)