Question: PROBLEM 2: Part- A Based on the following data; State of the Economy Probability Stock A Rate of Return Recession 0.2 -5% - Low Growth

PROBLEM 2: Part- A Based on the following data;

State of the Economy Probability Stock A Rate of Return

Recession 0.2 -5% - Low Growth 0.3 10%

Normal Growth 0.5 20%

Calculate the expected return and the standard deviation on Stock A.

Part-B: Given the following historical data: Year Rate of return for Stock X Rate of Return for Stock Y 2020 25% 10% 2019 16% 12% 2018 14% 8% 2017 5% 10%

Calculate the average return and the standard deviation of returns for a portfolio where 50% of the funds are invested in Stock X and the rest in Stock Y.

PLEASE USE EXCEL

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