Question 1 (7 points) Saved Consider the following information: Probability of State of economy Boom 0.2 Normal 0.5 Recession 0.3 state Return Stock A 15% 7% 3% Return Stock B 9% 11% 13% 1. What is the expected return of the portfolio made of 60% investment in Stock A and rest in Stock B? II. What is the beta of the portfolio (in part 1) if beta of Ais 0.90 and beta of B is 1.72 [1 mark] it. If the market risk premium is expected to be 4%, what must be the risk-free rate? (1.5 marks) iv. What would be the expected return of a portfolio consisting of equal investment in Stock A, Stock B, T-Bills and S&P 500? (1.5 marks] v. What is the beta of the portfolio (in part iv)? [1.5 marks]